The Implied Volatility of an Option

question 26

Multiple Choice

The implied volatility of an option

• A)Is the volatility that would have to be plugged into a given option-pricing model to obtain the observed market price.
• B)Can only be calculated using the Black-Scholes model.
• C)Is the volatility implied by the underlying stock price over a given historical period.
• D)Is equal to the volatility that will actually be realized over the life of the option.