Which One of the Following Statements Related to the Implied

Multiple Choice

Which one of the following statements related to the implied standard deviation (ISD) is correct?

A) The ISD is an estimate of the historical standard deviation of the underlying security.
B) ISD is equal to (1 − d₁) .
C) The ISD estimates the volatility of an option's price over the option's lifespan.
D) The value of ISD is dependent upon both the risk-free rate and the time to option expiration.
E) ISD confirms the observable volatility of the return on the underlying security.