The Real Challenge Was To Model All The Interest Rates Simultaneously, So You Could Value Something That Depended Not Only On The Three-month Interest Rate, But On Other Interest Rates As Well. - SearchQuotes

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The real challenge was to model all the interest rates simultaneously, so you could value something that depended not only on the three-month interest rate, but on other interest rates as well.

John Hull

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The problem with interest rates are that you are not modeling a single number, you are modeling a whole term structure, so it is a sort of different type of problem.

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In the interest rate area, traders have for a long time used a version of what is known as Black's model for European bond options; another version of the same model for caps and floors; and yet another version of the same model for European swap options.

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