CFA Practice Question

There are 227 practice questions for this study session.

CFA Practice Question

Which statement is FALSE?
A. The Black model is applicable to options on underlying instruments that are costless to carry.
B. If there is an agreed-upon model in the market, quoting a particular option on its price is equivalent to quoting it on the implied volatility.
C. Delta addresses how likely the underlying stock price change will be.
Explanation: C is false. Delta is a static risk measure. It measures how much the option value will change given a change in the stock price.

B is true. There is a one-to-one relationship between the implied volatility and the option price. The implied volatility can be used as a quoting mechanism.

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