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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 passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe term structure models and how they are used.
CFA® 2025 Level II Curriculum, Volume 4, Module 27.