If the Volatility Implied from an At-The-Money Put Currency Option

question 3

Multiple Choice

If the volatility implied from an at-the-money put currency option were used to price other put options on the currency,which of the following would be true?

• A) Out-of-the money and in-the-money prices would be too high
• B) Out-of-the money and in-the-money prices would be too low
• C) Out-of-the-money option prices would be too high and in-the-money option prices would be too low
• D) Out-of-the-money option prices would be too low and in-the-money option prices would be too high

---

Definitions:

Personal Property

All types of property except land and the buildings on it, including movable items and intangible assets.

Real Property

Land and anything permanently affixed to it, such as buildings and trees, considered a form of real estate.

Personal Property

Items of property that are not fixed to one location and can be moved, such as furniture, vehicles, and electronics.

Classification

The systematic arrangement into categories or groups based on shared characteristics or criteria.