The Implied Standard Deviation Used in the Black-Scholes Option Pricing

question 51

Multiple Choice

The implied standard deviation used in the Black-Scholes option pricing model is:

• A)based on historical performance.
• B)a prediction of the volatility of the return on the underlying asset over the life of the option.
• C)a measure of the time decay of an option.
• D)an estimate of the future value of an option given a strike price (E).
• E)a measure of the historical intrinsic value of an option.

---

Definitions:

Hormonal Reasons

Explanations for physiological or behavioral phenomena that are based on the activity or levels of hormones in the body.

Homosexuals

People who prefer sexual partners of the same sex. People usually call homosexual men gay and homosexual women lesbians.

Sexual Partners

Individuals with whom a person has had sexual relations.

Male Domination

A social system in which males hold primary power and predominate in roles of political leadership, moral authority, and control of property.