Interest rate models compared: No one-size-fits-all solution for predicting rates.
Equilibrium short-rate models and no-arbitrage models were compared in this study. Different interest rate models were tested, like the CIR and Vasicek models, and the HW, Binomial lattice, BK, and HJM models. The results showed that no single model works for all situations. The volatility of interest rates depends on the level rate, affecting how well the models predict future rates.