The formulae given in the core reading for for the price of a ZCB is different(in terms of notation) from the one given in the table (2014). Is it accetpable to write the one given in the tables, if asked to produce the formulae for Vaisicek model in the examination? Or, do I need to memorize the one given in the core reading? Also, what does L represent in the given formulae(table)? Thank you.
Check out the Examiners' Report for CT8 April 2015 Question 10 - copying the bond formula out of the Tables would have been enough. However, it wouldn't have helped you for the remainder of the question because of the mysterious L you've identified. If you take a look at the formula for the "Instantaneous forward rate" under the Vasicek model on page 44 of the Tables, you'll see that L is the long-term instantaneous forward rate. It's not immediately obvious, but if you let \(\tau\) tend to infinity, then \(f(\tau)\) tends to L.
