Short-rate model

The short-rate model is a way of predicting how much interest a bank will pay you when you give them your money to keep safe. Interest is the amount of money that the bank pays you for your money being with them. The short-rate model uses math to predict what kind of interest rates different banks might offer. It does this by looking at things like current economic conditions, inflation rates, historical trends in interest rates, and other data. By using this model, banks and other financial institutions can predict how much interest their customers might get if they put their money with them.