# Why is the Black 76 model not considered an interest rate model?

The Black 76 model is one of the standard models for interest rate derivatives like pricing caps, floors, swaptions, etc.

The Black 76 model is given as $$dF_t = \sigma F_t dW_t$$ so it models the dynamics of the forward rate $F_t$ which implies a certain term structure. Why is the Black 76 model not considered an interest rate model (like Vasicek) in the literature even though it is used for pricing interest rate derivatives?

• I'd say that it is considered an interest rate model. What make you think that it is not? – MarinD Aug 22 '16 at 21:16
• E.g. in Hull's Options, Futures, and other Derivatives, 9e it's not mentioned in chapter 31 (Interest Rate Derivatives: Models of the Short Rate) at all, nor is Black-Scholes. Ok, it doesn't model the rate directly, but the forward. But I'm wondering why it's not mentioned in literature as model for the term structure as you can describe the term structure by rates, discount factors or forwards. – dnl Aug 22 '16 at 21:38