VIX can be used
A)to price interest rate volatility.
B)to measure the volatility of the underlying stock price based on the observed option prices.
C)to estimate the risk of default premium of the underlying debt.
D)none of the above.

Question

Quizplus · Accepted Answer

VIX (CBOE Volatility Index) is a measure of the expected volatility of the S&P 500 index over the next 30 days, based on the prices of options on the index. It is commonly used as a gauge of market sentiment and is often referred to as the "fear index." It is not used to price interest rate volatility nor to estimate the risk of default premium of the underlying debt.

VIX Can Be Used