What Is the Difference Between Implied Volatility and Historical Volatility

question 17

Essay

What is the difference between implied volatility and historical volatility?

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Definitions:

Absolute Threshold

The minimum stimulus intensity required to be perceived by the senses, such as the softest sound a person can hear.

Basilar Membrane

A critical structure within the cochlea of the inner ear that plays a key role in sound perception by vibrating in response to sound waves.

Frequencies

The rate at which a vibration occurs that constitutes a wave, either in a material (as in sound waves) or in an electromagnetic field (as in radio waves and light).

Place Theory

A theory in hearing that suggests different areas of the basilar membrane respond to different frequencies, helping to identify the pitch of sounds.