The Black–Karasinski model is a mathematical model used in finance to describe the dynamics of interest rates. It is specifically used for modeling the evolution of the logarithm of interest rates, leading to log-normal distributions. The model is a variation of the popular Vasicek and Cox-Ingersoll-Ross (CIR) models, and it captures the behavior of interest rates with mean reversion, which is a characteristic of many interest rate processes.
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