22.2 Why Interest rate Derivatives are Much more difficult to Value Than Stock Options We are dealing with the whole term structure of interest rates; not a single variable The probabilistic behavior of an individual interest rate is more complicated than that of a stock price Options, Futures, and other Derivatives, 5th edition 2002 by John C. HullOptions, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull 22.2 Why Interest Rate Derivatives are Much More Difficult to Value Than Stock Options • We are dealing with the whole term structure of interest rates; not a single variable • The probabilistic behavior of an individual interest rate is more complicated than that of a stock price