Question: a. What is historical volatility? What is implied volatility? How to interpret the situation if you observe that historical volatility is lower than implied volatility?

a. What is historical volatility? What is implied volatility? How to interpret the situation if you observe that historical volatility is lower than implied volatility?

b. Why is the distinction between investment and consumption assets important in the determination of forward and futures prices? On 20th April, 2020, the future contracts for May delivery of West Texas is minus $37.63 a barrel, how to explain the negative future price using the knowledge acquired from this course?

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