Explain the Concept of "Price Discovery" in Financial Markets ▴ Learn

Explain the Concept of “Price Discovery” in Financial Markets.

Price discovery is the process by which buyers and sellers interact to determine the equilibrium price of an asset. Futures markets, especially those with high liquidity, are often key venues for price discovery because they incorporate market expectations of future supply, demand, and economic conditions, which can then influence the current spot price.

Differentiate between Historical Volatility and Implied Volatility

What Is the Difference between Implied Volatility (IV) and Historical Volatility (HV)?

Define ‘Price Discovery’ in the Context of Financial Markets

Distinguish between ‘Historical Volatility’ and ‘Implied Volatility’