Multiple Choice
A month ago,the price of an IBM stock was $110 and its volatility was 28%.Today,its price is still $110 but its volatility has gone up to 40%.If the one-month interest rate has not changed over the last month and IBM stock does not pay any dividends (i.e. ,there are no costs or benefits of carry,) then:
A) The one-month forward prices of IBM today equals the one-month forward price a month ago
B) The one-month forward price of IBM today is greater than the one-month forward prices a month ago by $10
C) The one-month forward prices of IBM today is lower than the one-month forward price a month ago by $10
D) The one-month forward price of IBM today is $44
Correct Answer:
Verified
Correct Answer:
Verified
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