# Vasicek Model

*Quant & Pricing — Finicade finance glossary*

The Vasicek model describes the short interest rate as mean-reverting with constant volatility, the first tractable model of the whole yield curve. Its elegance is analytic: bond prices and many derivatives have closed-form solutions. Its notorious flaw is that rates can go negative — treated as fatal for decades, then quietly vindicated when several central banks pushed policy rates below zero.

**Also known as:** Vasicek, Vasicek interest rate model

**Related terms:** [Mean Reversion](https://finicade.com/glossary/mean-reversion), [Cox-Ingersoll-Ross Model](https://finicade.com/glossary/cox-ingersoll-ross-model), [Hull-White Model](https://finicade.com/glossary/hull-white-model), [Yield Curve](https://finicade.com/glossary/yield-curve), [Stochastic Process](https://finicade.com/glossary/stochastic-process)

Source: https://finicade.com/glossary/vasicek-model