 32.32.1: Explain the difference between a Markov and a nonMarkov model of t...
 32.32.2: Prove the relationship between the drift and volatility of the forw...
 32.32.3: When the forward rate volatility st; T in HJM is constant, the HoLe...
 32.32.4: When the forward rate volatility, st; T, in HJM is eaTt , the HullW...
 32.32.5: What is the advantage of LMM over HJM?
 32.32.6: Provide an intuitive explanation of why a ratchet cap increases in ...
 32.32.7: Show that equation (32.10) reduces to (32.4) as the i tend to zero.
 32.32.8: Explain why a sticky cap is more expensive than a similar ratchet cap.
 32.32.9: Explain why IOs and POs have opposite sensitivities to the rate of ...
 32.32.10: An option adjusted spread is analogous to the yield on a bond. Expl...
 32.32.11: Prove equation (32.15).
 32.32.12: Prove the formula for the variance VT of the swap rate in equation ...
 32.32.13: Prove equation (32.19).
 32.32.14: In an annualpay cap, the Black volatilities for atthemoney caple...
 32.32.15: In the flexi cap considered in Section 32.2 the holder is obligated...
Solutions for Chapter 32: HJM, LMM, and Multiple Zero Curves
Full solutions for Options, Futures, and Other Derivatives  9th Edition
ISBN: 9780133456318
Solutions for Chapter 32: HJM, LMM, and Multiple Zero Curves
Get Full SolutionsChapter 32: HJM, LMM, and Multiple Zero Curves includes 15 full stepbystep solutions. Options, Futures, and Other Derivatives was written by and is associated to the ISBN: 9780133456318. Since 15 problems in chapter 32: HJM, LMM, and Multiple Zero Curves have been answered, more than 16998 students have viewed full stepbystep solutions from this chapter. This textbook survival guide was created for the textbook: Options, Futures, and Other Derivatives, edition: 9. This expansive textbook survival guide covers the following chapters and their solutions.

absolute advantage
the ability to produce a good using fewer inputs than another producer

capital
the equipment and structures used to produce goods and services

circularflow diagram
a visual model of the economy that shows how dollars flow through markets among households and firms

common resources
goods that are rival in consumption but not excludable

dominant strategy
a strategy that is best for a player in a game regardless of the strategies chosen by the other players

dominant strategy
a strategy that is best for a player in a game regardless of the strategies chosen by the other players

exports
goods produced domestically and sold abroad

Federal Reserve (Fed)
the central bank of the United States

income elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded divided by the percentage change in income

indifference curve
a curve that shows consumption bundles that give the consumer the same level of satisfaction

law of supply
the claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises

marginal cost
the increase in total cost that arises from an extra unit of production

monopolistic competition
a market structure in which many firms sell products that are similar but not identical

monopoly
a firm that is the sole seller of a product without close substitutes

negative income tax
a tax system that collects revenue from highincome households and gives subsidies to lowincome households

poverty rate
the percentage of the population whose family income falls below an absolute level called the poverty line

production function
the relationship between quantity of inputs used to make a good and the quantity of output of that good

scarcity
the limited nature of society’s resources

stagflation
a period of falling output and rising prices

supply curve
a graph of the relationship between the price of a good and the quantity supplied