Investors look to these corporate-level indicators when determining the most viable security purchase that will facilitate effective returns and minimize risk of volatility. The IVOL comes into play when a specific security does not conform to known economic models that illustrate either inverse relationships to tangible corporate level characteristics or direct relationships to known securities in a comparable category. Various factor-model equations have been developed to establish the expected rate of return of a security, utilising complex variables such as known excess stock returns, known sensitivities to volatility risk, and certain conditional market means (averages). Consider the complexity of one such factor-model calculation to determine expected security return: Exhibit 1: Factor-Model Calculation to Determine Expected Aggregate Returns Source: Ang, et al. (2006). The cross-section of volatility and expected returns. The interchangeable variables within similar equation modelling dictate no elongated explanation of the complexity of this scientific approach to aggregate security returns. However, such models that determine not only future stock returns, but also volatility risk with a specific security or basket of securities in comparable industries, are designed to facilitate more effective and profitable security investment. ...

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