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2 For this question, you should use the standard Black Scholes model for the market described above; the parameters should be appropriately chosen so as

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2 For this question, you should use the standard Black Scholes model for the market described above; the parameters should be appropriately chosen so as to correspond to the characteristics of the market. Note that St denotes the price of the risky asset at the terminal horizon. d) Explain (using words and/or formulas) the concept of 'implied volatility

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