New pricing method revolutionizes valuation of long-term interest rate risk!
Investors face different risks based on how long they plan to hold onto their investments. When interest rates are unpredictable, a new way of valuing these risks is needed. By adjusting prices based on short-term interest rate changes, we can better manage long-term interest rate risks for things like bonds and insurance. This approach helps us accurately value investments over time, even when interest rates are constantly changing.