Difficulty: Medium
Category: Options & Greeks
Practice quant interview questions from top firms including Jane Street, Citadel, Two Sigma, DE Shaw, and other leading quantitative finance companies.
Topics: volatility-surface, options, volatility-smile, volatility-smirk, term-structure
Which of the following statements correctly identifies the characteristics and typical market occurrences of a volatility smile, volatility smirk, and volatility term structure? Consider a scenario where you are analyzing options prices across various strike prices and expiration dates for different asset classes. Distinguishing between these shapes is crucial for informed trading decisions.
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