Question 7 Which of the following statements is correct? 5 points Implied volatility is forward looking, i.e. standing at time t, it is the O expected volatility under the real probability measure between t and (t + T), where T is the time-to-maturity. To estimate implied volatility, we need to decrease the arbitrary guess of volatility, when the Black-Scholes option price which is based on our arbitrary guess of volatility is greater than the option price observed in the market. According to the Black-Scholes model, implied volatility should decrease O as the time-to-maturity T increases. o Implied volatility increases as option prices decrease