Long-dated forward rates

Long-dated forward rates 145 in long-bond yielfis 152... 

The different models can lend themselves to a particular calibration method. In the Ho-Lee model, rally parallel yield curve shifts are captured and the current yield curve is a direct input therefore, a constant volatility parameter is used. This implies that all the forward rate implied volatilities are identical. In practice, this is not necessarily realistic, as long-dated bond prices often experience lower volatility than short-dated bond prices. The model also assumes... 

Extremely long-dated zero coupon and forward rates can never decline, even when expected long-term future interest rates fall therefore, this limits the extent to which very long-dated bond yields are affected by a change in the current interest-rate environment (Dybvig et al., 1996). 

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