Financial Risk Manager Part 1
Get started today
Ultimate access to all questions.
Comments
Loading comments...
Ultimate access to all questions.
Which of the following correctly describes a weakness of implied volatility as a predictor of future volatility?
A
Broad indexes of implied volatility do not exist, making forecasting the volatility of broad asset classes difficult.
B
Implied volatility is a backward-looking measure, which limits its usefulness in estimating future volatility.
C
Implied volatilities are not available for assets that do not have actively traded options.
D
In practice, implied volatilities differ for options with different maturities on the same underlying asset, even though theory suggests they should be the same.