Option Volatility Is Defined as the Square Root of the Standard

question 71

True/False

Option volatility is defined as the square root of the standard deviation of daily percentage changes in the underlying exchange rate.

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Definitions:

Economies of Scale

A cost advantage that arises with increased output of a product, where fixed costs are spread out over more units of production, reducing the cost per unit.

Inventory Carrying Costs

Inventory carrying costs include the total expenses associated with holding and storing unsold goods, such as warehousing, insurance, depreciation, and opportunity costs.

Disintermediation

Elimination of intermediaries, such as distribution centers, in the delivery of products from a producer to a consumer.

Distribution Centers

Facilities that store and distribute a company's inventory to retail locations or directly to customers.