I am quite new to rates modeling and I have a question on the pros and cons of calibrating to larger set of vanilla instruments v/s calibrating to an exotic's 'natural' hedges. For example, I could value a Bermudan with a 1F model calibrating to co-terminal Europeans; or I could use a LIBOR market model to calibrate to the entire swaption matrix. What are the things to keep in mind while making this choice?


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