"Equilibrium" Models of the Term-Structure

question 9

Multiple Choice

"Equilibrium" models of the term-structure

• A) Are general equilibrium models of all securities in the economy.
• B) Are models which match observed term structure curves perfectly.
• C) Include such models as Vasicek (1977) and Cox, Ingersoll, and Ross (185).
• D) Are models which ensure that "disequilibrium" phenomena, such as negative interest rates, cannot occur.

---

Definitions:

Dividend Income

Income received from owning shares of stock in a company, usually paid out from the company's profits to shareholders at regular intervals.

Shares

Portions of ownership in a corporation, representing a claim on part of its assets and earnings.

Dividend Yield

A financial ratio indicating how much a company pays out in dividends each year relative to its stock price, used by investors to gauge return on investment.

Dividend Income

Income received from owning shares of a company, distributed from the company's earnings.