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Implied volatility

K

Killian

Member
When calculating implied volatility in the black Scholes pricing formula when we are given delta, will we get full marks for using trail and error with interpolation to find the implied volatility rather than the algebraic approach and solving the quadratic?
 
In broad terms, if you obtain the same level of accuracy that the examiners were looking for by trial and error then you would be credited with full marks. If you were slightly less accurate (due to the less accurate method), then there would probably be some penalty, though I would imagine this would be a small penalty rather than anything severe.

The main issue in my view isn't the loss of marks, it's the waste of time as the analytical approach would probably be much quicker.
 
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