In the Ho & Lee (1986) Model, the Parameter $\delta$ Plays a Crucial Role

Multiple Choice

In the Ho & Lee (1986) model, the parameter $\delta$ plays a crucial role. Which of the following statements best describes this parameter?

A) $\delta > 1$ .
B) As $\delta$ increases the volatility of interest rates increases.
C) As $\delta$ increases the volatility of interest rates decreases.
D) $\delta < 0$ .