Vasicek (1977)posits a General Mean-Reverting Form for the Short-Rate $d r _ { t } = k \left( \theta - r _ { t } \right) d t + \sigma d W _ { t }$

Multiple Choice

Vasicek (1977) posits a general mean-reverting form for the short-rate: $d r _ { t } = k \left( \theta - r _ { t } \right) d t + \sigma d W _ { t }$ He then derives,in the absence of arbitrage,a restriction on the market price of risk $\lambda$ of any bond,where $( \mu - r ) / \eta = \lambda$ of any bond,with $\mu$ being the instantaneous return on the bond,and $\eta$ being the bond's instantaneous volatility.The derived restriction is that

A) $\lambda$
Is a constant.
B) $\lambda$
May be a function of time
$t$
,but not of any other time-
$t$
Information or of the maturity
$T$
Of the bond.
C) $\lambda$
May be a function of the time-
$t$
Short rate
$r _ { t }$
,but not of current time
$t$
Or of the bond maturity
$T$
)
D) $\lambda$
May be a function of time
$t$
And the time-
$t$
Short rate
$r _ { t }$
,but not of the bond maturity
$T$
)