Which One of the Following Statements Related to the Implied

question 75

Multiple Choice

Which one of the following statements related to the implied standard deviation (ISD) is correct?

• A)The ISD is an estimate of the historical standard deviation of the underlying security.
• B)ISD is equal to (1 - D₁).
• C)The ISD estimates the volatility of an option's price over the option's lifespan.
• D)The value of ISD is dependent upon both the risk-free rate and the time to option expiration.
• E)ISD confirms the observable volatility of the return on the underlying security.

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