The Vasicek interest rate model (or simply the Vasicek model) is a mathematical method of modeling interest rate movements. The model describes the movement of an interest rate as a factor composed of market risk, time, and equilibrium value, where the rate tends to revert towards the mean of those factors over time. Essentially, it predicts where interest rates will end up at the end of a given period of time, given current market volatility, the long-run mean interest rate value, and a given market risk factor.
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