Question

​​Can you provided 10 relationships between volatility and asset prices.

Answer 1

1. Volatility is a measure of dispersion of the asset returns in statistics.

2. If the volatility is high , it means that the security in the market is risky.

3. Volatility depicts that how an asset price changes around the means.

4. An asset that is more volatile is considered to be more risky because its price is hard to predict.

5. When there is a fall in the asset price, it leads to an increase in its volatility.

6. Similarly, when there is a rise in the asset price, it leads to a decline in it volatility.

7. If the volatility is low, it means that the security in the market is not risky.

8. Less volatile asset is considered to be less risky because its price is predictable.

9. A price of an asset can change in a short period of time and thus leads to a change in volatility.

10. There are various ways to measure volatility that includes option pricing models, beta coefficients, and S.D. (standard deviation) of returns.