Testing the Informational Efficiency of OTC Optionson Emerging Market Currencies /

This paper analyzes the informational efficiency of OTC currency options on the Czech koruna and the Polish zloty correcting for the volatility risk premium and errors-in-variable problems, using state-of-the-art techniques (Chernov 2001). It finds that these markets are more efficient than mature m...

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Autore principale: Chan-Lau, Jorge
Altri autori: Mendez Morales, Armando
Natura: Periodico
Lingua:English
Pubblicazione: Washington, D.C. : International Monetary Fund, 2003.
Serie:IMF Working Papers; Working Paper ; No. 2003/001
Accesso online:Full text available on IMF
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520 3 |a This paper analyzes the informational efficiency of OTC currency options on the Czech koruna and the Polish zloty correcting for the volatility risk premium and errors-in-variable problems, using state-of-the-art techniques (Chernov 2001). It finds that these markets are more efficient than mature markets possibly because of higher relative participation of informed dedicated investors, which offset the effects of relative illiquidity and higher transaction costs in these countries. Moreover, implied volatilities generally anticipate the direction of volatility correctly, with a bias to overpredicting volatility increases reflecting one-sided markets. 
538 |a Mode of access: Internet 
700 1 |a Mendez Morales, Armando. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2003/001 
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