alleryStart learning →Yield curve simulation for rate risk usually uses which framework?
ACapital asset pricing model
BModigliani-Miller theorem
CBlack-Scholes option model
DHeath-Jarrow-Morton model
Answer & Solution
Correct answer: D. Heath-Jarrow-Morton model
The HJM framework keeps simulated curve moves consistent with current market curves and free of riskless arbitrage.
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