What is deterministic spot rate function
What is deterministic spot rate function?
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In actuality, we have many bonds of various maturity, some without any coupons but most along with, and also very liquid swaps of different maturities. All such instruments are a constraint at the r(t) function. Bootstrapping is backing out a deterministic spot rate function, r(t), also termed as the (instantaneous) forward rate curve which is consistent along with all of these liquid instruments.
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