An analyst wants to estimate the correlation between stocks on the Frankfurt and Tokyo exchanges. He collects closing prices for select securities on each exchange but notes that Frankfurt closes...

An analyst wants to estimate the correlation between stocks on the Frankfurt and Tokyo exchanges. He collects closing prices for select securities on each exchange but notes that Frankfurt closes after Tokyo. How will this time discrepancy bias the computed volatilities for individual stocks and correlationsbetween any pair of stocks, one from each market? There will be
a. Increased volatility with correlation unchanged
b. Lower volatility with lower correlation
c. Volatility unchanged with lower correlation
d. Volatility unchanged with correlation unchanged