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Traders by Using the Historical Volatility Assume That the Immediate

question 62

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Traders by using the historical volatility assume that the immediate future will be the same as the recent past, and the historical volatility will equal the forward-looking volatility.


Definitions:

Component Reliability

The likelihood of a component to perform its required function under stated conditions for a specified period.

Preventative Maintenance

A maintenance strategy involving regular, routine checks, servicing, and repairs to prevent potential problems and ensure equipment continues to operate efficiently.

Breakdown Cost

The expenses incurred when a machine or system fails, including repair costs, lost productivity, and potential penalties for delayed deliveries.

Likelihood of Breakdown

The probability or chance that a system or component will fail to perform its intended function.

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