Let us consider a model of a security market which consists of d + 1 traded or liquid assets: one zero coupon bond or a savings account with zero interest rate, and d stocks.
Overview of utility-based valuation
The main characterizing property of QU is that all prices of traded securities denominated in terms of the price of the zero-coupon bond maturing at time U have no drift under QU .
Incomplete Continuous-time Securities Markets with Stochastic Income Volatility
In particular, we require that a bank account and zero-coupon discount bonds of all maturities satisfy this condition. A security is referred to as a (ﬂoating-rate) bank account, if it is “locally riskless” 7 .
``String'' formulation of the Dynamics of the Forward Interest Rate Curve