Illustrates the Epstein–Wilmott model
Illustrates the Epstein–Wilmott model?
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It is a nonlinear, posing constraint at the dynamics of the short rate. One of the outputs of such model is the Yield Envelope as in figure given below which illustrates no-arbitrage bounds at the forward curve.
Figure: The Yield Envelope illustrating ranges of possible yields. The point at that the range is zero is, here are traded contracts.
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