One Way to Infer Future Currency Volatility Is to Consider

question 48

Essay

One way to infer future currency volatility is to consider currency option prices since they estimate future currency volatility rather than report past currency volatility.How do current currency option prices indicate currency volatility?

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Definitions:

Gross Profit Rate

The ratio of gross profit to net sales, indicating the efficiency of a company in managing its production and labor costs.

Net Sales

The sales income left after subtracting returns, reductions for damaged or missing items, and price discounts.

Sales Revenue

The income received by a company from its sales of goods or the provision of services, before any expenses are subtracted.

Net Sales

The amount of revenue generated from sales activities after returns, allowances, and discounts have been subtracted.