Volatility is defined as the extent to which the price of a financial asset  fluctuates over a given time frame, indicating the level of risk associated with that asset.

For instance, if a stock transitions from ₹100 to ₹120 and subsequently drops  t o ₹85 within a week, it exemplifies high volatility.

How to Understand :

Volatility shows how unpredictable or risky a price or market is. High volatility means big

price changes; low volatility means prices stay steady.

Importance :

It assists investors in evaluating the risk level of their investments.

Volatility is essential for making informed decisions about when to buy or sell assets in  trading.

It affects the stability and performance of an investment portfolio.

A thorough understanding of volatility aids in planning safer and smarter investment  approaches.