The Black-Scholes-Merton Model's Implied Volatility Is

question 6

Multiple Choice

The Black-Scholes-Merton model's implied volatility is:

• A) the market's estimate of the future value of the stock's random volatility over the option's life
• B) the volatility that equates the BSM model price to the market price,if all other inputs are known
• C) the market's estimate of the future value of the stock's random volatility over an infinitesimal time interval
• D) the market's estimate of the stock's random volatility over an infinitesimal time interval beginning when the option matures
• E) another name for estimating the volatility using historical stock price data

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Definitions:

Causation

The relationship between cause and effect where one event (the cause) makes another event happen (the effect).

Meta-Analysis

A statistical analysis that combines the results of multiple scientific studies to arrive at a conclusion that is statistically stronger than any single study due to increased numbers of subjects.

Statistical Technique

A method or procedure applied to data collection, analysis, interpretation, and presentation in statistical studies.

Molecular Genetic Studies

Studies of the structure and function of genes that help in understanding how genetic mutations can lead to disease.