Plotting the volatility of a security in a three dimensional graph,using time to maturity on one axis and strike price on another,is referred to as volatility:
A) Skew
B) Smile
C) Smirk
D) Surface

Question

Quizplus · Accepted Answer

Plotting the volatility of a security in a three-dimensional graph using time to maturity on one axis and strike price on another is referred to as volatility surface. Therefore, the best choice is D, "Surface." A is incorrect as skew refers to a non-symmetrical distribution of prices. B is incorrect as a smile refers to a particular shape of the volatility curve. C is incorrect as smirk is not a commonly used term in finance.

Plotting the Volatility of a Security in a Three Dimensional