The Calculation of a Weighted Average of the Implied Volatility

question 43

Multiple Choice

The calculation of a weighted average of the implied volatility estimates from options on the Standard & Poor's 500 index using a wide range of exercise prices is known as

• A) Spider.
• B) QQQ.
• C) VIX.
• D) CIN.
• E) VOL.

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Definitions:

Simplifying Assumptions

Basic conditions that modelers set to make complex economic analyses more manageable and understandable.

Rationality

The quality of being based on or in accordance with reason or logic; often involves making decisions that are optimal based on available information.

Neoclassical Economic Models

These models are based on the assumptions of rational behavior and efficient markets, focusing on how supply and demand determine prices and allocate resources.

Determinants

Determinants are factors or elements that cause something to happen or significantly influence the outcome of a process or situation.