Question

Can you provide 10 general impacts between volatility and asset prices.

Answer 1

Volatility refers to the measure of indicating the increase or decreasing level of the trading price of the financial assets accordingly with the market conditions. The level of volatility determines the level of asset prices holding the stock market operations in all the countries. But the effects of Volatility gains momentum on analyzing the impact on asset prices. Let us discuss the 10 general impacts between volatility and asset prices.

1) Economic impact:- The global market share determines the gap of reliability between volatility and asset prices. The crash of the face value decreases the investors' reputation in appreciating the asset inventory stocks.

2) Price fluctuation impact:- Fixing the market value of the assets during the period of the economic boom and the depression forces investors to carry out the buying and selling activities thoroughly in the trade cycle.

3) Estimation impact:- The estimation figures for asset prices of all Business and the Economic Analyst determines the then position of all asset prices. The negative prediction will entirely shatter the healthy position of all the investors.

4) Skew concept impact:- The skew option determines the forecasting the investors about the expiry prices by any uncertainties forces all the investors to decrease the appreciation level of asset prices by selling with the optimal price.

5) Hedging fund impact:- When the investors try to reduce the risk of volatility through hedging funds, it becomes the secured asset owned by them. Hedging option refers to protecting the existing assets by paying less amount of premium as a secured, less-risk-based asset borrowing scheme.

6) Implied volatility impact:- Bull market traders use the concept of implied volatility impact. They alarm the investors to sell their assets at the profit price. But the negative assumptions of the bull market traders do not fulfill the profit focus of the traders.

7) Income Tax impact:-  The investors who have don't have the asset worth rather than the rate of paying taxes, then it will gain profit return in the form of a high rate of return. But the taxpayers who pay high taxes cannot able to appreciate asset control.

8) General impact:- The options for choosing the best strategy level through brokers in the stock exchange can determine the level of asset price appreciation.

9) Market performance impact:- The international market trade level across the boundaries can determine the value of assets. The reputation of the foreign bonds will fetch the higher interest rate will determine the interest rate of the asset prices.

10) Ability purchasing power impact:- The purchasing power of each individual to buy or sell the securities bond investment can determine the worth of the assets gaining the interest rate. The income level determines the nature of the purchasing power of the individuals to hold the assets.