Volatility Cannot Be Directly Observed for Calculation Purposes of the Option

question 6

Multiple Choice

Volatility cannot be directly observed for calculation purposes of the option pricing model. Therefore, it may be determined from

• A)historic volatility.
• B)forward-looking volatility.
• C)implied volatility.
• D)any of the above

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Definitions:

Observational Data

Facts and figures obtained by watching how people actually behave, using mechanical, personal, or neuromarketing data collection methods.

Primary Data

Original and direct data collected by a researcher firsthand for a specific research purpose or project.

Mechanical Methods

Pertains to procedures and techniques involving machinery or tools in processes such as manufacturing or data processing.

External Secondary Data

Information collected from outside sources that has already been gathered for some purpose other than the current research need.