Exchange rate volatility affects foreign exchange operations, commercial transactions, and international investments. It can be mitigated by using futures to fix exchange rates, but there are drawbacks to hedging against it. Exchange rate volatility refers to the tendency of foreign currencies to appreciate or depreciate in value, which affects the profitability of foreign exchange operations. […]
The Volatility Index (VIX) measures the market’s expectation of short-term volatility based on option prices on the S&P 500. It is expressed as an annual percentage and is sometimes referred to as an “investor fear indicator.” VIX, created by the Chicago Board Options Exchange (CBOE) in 1993, is the Volatility Index. Measures the market’s expectation […]
Stock market volatility reflects investor nervousness due to factors such as political unrest, weather, and economic reports. High volatility can trigger heavy trading and benefit the market, but it’s not always a predictor of a rally or crash. Government reports, corporate earnings, and retail sales also impact the market, while political and environmental factors can […]
VIX is the volatility index created by CBOE in 1993, measuring market expectations of short-term volatility through the prices of S&P 500 stock index options. It uses the Black-Scholes options pricing model to calculate implied volatilities and is expressed as an annual percentage. VIX is sometimes referred to as an “investor fear indicator,” but it […]
Volatility models predict times of uncertainty and potential disruption to trading practices, helping businesses remain competitive. The ARCH-GARCH and stochastic volatility models use white noise to determine volatility. Understanding volatility is important for investors to make profitable decisions. While not always accurate, volatility models are common and their accuracy is expected to improve with technological […]
