Which model does not try to explain the observed yield curve?

A. The CIR model
B. The Vasicek model
C. The Ho-Lee model

Correct Answer: C

It takes the yield curve as given and correct.

The argument for fitting models to market prices is that a good deal of information about the future behavior of interest rates is incorporated into market prices, and, therefore, a model fitted to those prices captures that interest rate behavior.