The pattern of volatility across exercise prices is often called
A)the price-fluctuation graph
B)the volatility smile
C)the term structure of implied volatility
D)the skew
E)none of the above

Question

Quizplus · Accepted Answer

The pattern of volatility across exercise prices is commonly referred to as the "volatility smile." It is called a smile because the shape of the graph often appears to curve upward on both sides, resembling a smiling mouth. The other options listed do not accurately describe the pattern of volatility across exercise prices.

The Pattern of Volatility Across Exercise Prices Is Often Called