________ volatility are calculated by being backed out of the market option premium values traded.

Question

Quizplus · Accepted Answer

Implied volatility is calculated by using the option prices traded in the market along with a mathematical model such as Black-Scholes to determine the expected volatility of the underlying asset. This differs from historic volatility, which is based on actual past price movements, and forward-looking volatility, which is a prediction of future price movements. Therefore, the correct answer is C) Implied volatility.

________ Volatility Are Calculated by Being Backed Out of the Market