A Logical Indication Of Stock Price Volatility In Bombay Stock Exchange
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Abstract
The term ‘volatile’ refers to a price series or economic indicator that fluctuates significantly and swings wildly. This straightforward and easy-to-understand concept is at the root of many problems in finance. Unlike many other market indicators that can be measured directly, volatility must be measured. This is challenging (if not downright impossible) because we can’t say with confidence that volatility is ‘stochastic’ or that it fits any mathematical model. All we can say with confidence is that volatility is unpredictable. A good estimate of volatility, however, is essential for many applications, such as risk measurement, risk management, option pricing, and hedging.