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A non-dividend paying stock currently trades for $25 and has an annualised return standard deviation of 15%. Given that the continuously compounded risk-free rate of

A non-dividend paying stock currently trades for $25 and has an annualised return standard deviation of 15%. Given that the continuously compounded risk-free rate of return is 4% p.a., complete the following:

Explain the concept of implied volatility and how it can be a useful measure of market expectations.

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