An article in the Wall Street Journal observes: When volatility is low, options are cheaper. Briefly explain

Question:

An article in the Wall Street Journal observes: “When volatility is low, options are cheaper.” Briefly explain the reasoning behind this observation.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Money Banking And The Financial System

ISBN: 1801

3rd Edition

Authors: R. Glenn Hubbard, Anthony Patrick O'Brien

See More Books

Question Posted: Jan 03, 2019 08:17 AM

See More Questions

A 2016 article in the Wall Street Journal observes: Equity crowdfunding promises to be a major new source of funding for small businesses. a. What is equity crowdfunding, and what happened in 2016...
An article in the Wall Street Journal discusses the visual effects industry, which is made up of firms that provide visual effects for films and television programs. The article notes: "Blockbusters...
An article in the Wall Street Journal on the use of driverless trucks at Rio Tinto's Australian mines observes, "The new equipment cut many driving jobs.... But the reductions will be partly offset...
Show that 15 is an inverse of 7 modulo 26.
Many people who are involved in a small auto accident do not file a claim because they are afraid their insurance premiums will be raised. Suppose that City Farm Insurance has three rates. If you...
A random sample of scoring leaders from the NHL showed the following numbers of assists and total points. Based on these data, can it be concluded that there is a significant relationship between the...
How Do We Use Information Technology to Communicate at Work? (pp. 117119)
A gas-turbine power plant operates on the simple Brayton cycle between the pressure limits of 100 and 700 kPa. Air enters the compressor at 30C at a rate of 12.6 kg/s and leaves at 260C. A diesel...
please tell how to solve question third using BA II plus (calculator) ISE 13.3 MyLab Math If you choose, you can use Excel's PV function (present value) to answer the questions indicated. Answer each...
Thompson, a laborer for Seaman Plumbing Company, received serious injuries when he was buried alive while trying to connect the sewage line of Seafood Haven's restaurant to the city line of Bayou La...
According to an article in the New York Times, millions of amateur investors continue to actively buy and sell securities regularly. a. Why might buying and selling securities regularly not be a good...
In one of his annual letters to shareholders of Berkshire Hathaway, Warren Buffett wrote that: Even experienced investors and analysts encounter major problems in analyzing the financial condition of...
Review financial news sources such as Yahoo! Finance (finance.yahoo.com) and Google Finance (google.com/finance). Identify a company that has recently purchased 50% or more of another companys...
Alves Berhad beroperasi dalam industri elektronik dan komputer. Pengurus Kewangan sedang dalam proses menyediakan penyata kewangan untuk tahun kewangan apabila dia tiba-tiba jatuh sakit. Anda telah...
1. First, calculate p, the probability of CHD-1 in each level of BP Status. Take advantage of the fact that the mean of a 0/1 variable is the probability or percentage of observations equaling 1. a....
Explain the different types of budgets commonly used by healthcare facilities: Annual budget Authorized personnel budget Capital budget Expenditure budget Statistical budget Revenue budget Cash...
Use the range rule of thumb to identify the values that are significantly low, the values that are signficantly high, and the values that are neither significantly low nor significantly high. A test...
Comprehensive Problem Bug - Off Exterminators ( Algo ) Bug - Off Exterminators provides pest control services and sells extermination products manufactured by other companies. Following is the...
In Exercises, find the open intervals where the functions are concave upward or concave downward. Find any inflection points. f(x) -2 x + 1
3M Company reports the following financial statement amounts in its 10-K report: a. Compute the receivables, inventory, and PPE turnover ratios for both 2018 and 2017. (Receivables turnover and...
Explain how close-ended mutual funds are, at the same time, in some ways very similar to but in other ways very different from open-ended mutual funds.
Which of the following are characteristics that make hedge funds different from open-ended mutual funds? a. Investors in hedge funds are limited to individuals with a high net worth and institutional...
Explain how proprietary, or prop, trading, when done by investment banks, can result in the banks customers becoming the banks competition.
Rank the following three stocks by their risk-return relationship, best to worst. Night Ryder has an average return of 10 percent and standard deviation of 27 percent. The average return and standard...
Use the following information: \ table [ [ Country , \ table [ [ Consumer Prices ] ] , Interest Rates,Current Units ( per US$ ) ] , [ Forecast , 3 - month, 1 - yx Covt Bond,, ] , [ 2 0 2 4 e ,...
Year-to-date, Yum Brands had earned a 3.70 percent return. During the same time period, Raytheon earned 4.58 percent and Coca-Cola earned 0.53 percent. If you have a portfolio made up of 40 percent...

An article in the Wall Street Journal observes: When volatility is low, options are cheaper. Briefly explain

Question:

Step by Step Answer:

Volatility is an important part of the BlackScholes options pricing mo...View the full answer

Money Banking And The Financial System

Students also viewed these Business questions