Volatility Cannot Be Directly Observed for Calculation Purposes of the Option

question 6

Multiple Choice

Volatility cannot be directly observed for calculation purposes of the option pricing model. Therefore, it may be determined from

• A)historic volatility.
• B)forward-looking volatility.
• C)implied volatility.
• D)any of the above

---

Definitions:

Comparative Advantage

The ability of an individual or country to produce a particular good or service at a lower opportunity cost than its trade partners, leading to more efficient trade outcomes.

Domestic Price

The price of goods or services within a country, influenced by local demand and supply conditions.

World Price

The global market price of a good or service, determined by supply and demand in the international marketplace.

No-Trade Policy

A policy or stance that restricts or prohibits trading certain goods, services, or information between countries or jurisdictions.