I have been scratching my head over this question, but could not find out an answer. Can anyone explain how is term structure reflected from a short rate model?
Specifically, if we have a stochastic differential equation for dR(t). It is possible calculate the one year rate, two year rate three year rate etc from the integrals $\int_o^tR(t)dt$. However, how do we make sure that the two year rate is bigger than the one year rate?