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Basic Question 3 of 7
Under the Ho-Lee model, the probability that the yield curve can move up or down at each node is called the "implied risk-neutral probability." The Ho-Lee model:
B. does not assume market professionals are risk-neutral.
C. assumes market professionals are risk-averse.
A. assumes market professionals are risk-neutral.
B. does not assume market professionals are risk-neutral.
C. assumes market professionals are risk-averse.
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe fixed-income securities with embedded options;
CFA® 2025 Level II Curriculum, Volume 4, Module 27.