Interpret the following statements about value at risk so that they would be easily understood by a

Question:

Interpret the following statements about value at risk so that they would be easily understood by a nontechnical corporate executive:
a. VAR of $ 1.5 million, one week, probability = 0.01.
b. VAR of $3.75 million, one year, probability = 0.05?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Introduction To Derivatives And Risk Management

ISBN: 9781305104969

10th Edition

Authors: Don M. Chance, Robert Brooks

See More Books

Question Posted: Apr 07, 2016 08:42 AM

See More Questions

MULTIPLE-CHOICE QUESTIONS 1. In evaluating whether the client is a going concern, the auditor should ask which of the following questions? a. Are there indicators of going concern problems? b. Is it...
[A] Aon Corporations Mezzanine Preferred Stock In its 2002 annual report to shareholders, Aon Corporation described its mandatorily redeemable preferred stock as follows: In January 1997, Aon created...
After Enron, WorldCom, and other major corporate scandals that rocked America in the recent past, it seemed that nothing would surprise investors or regulators. However, almost everyone was shocked...
What does the following code fragment print? int[] a = { 1, 2, 3 }; int[] b = { 1, 2, 3 }; System.out.println(a == b);
Brandt Belting sells goods on account for 850,000 Mexican pesos. The foreign- exchange rate for a peso is $ 0.094 on the date of sale. Brandt Belting then collects cash on April 24 when the exchange...
Consider the cost curves of a trucking firm. a. Suppose there is an increase in the price of diesel. How will each of these cost curves shift up (if they shift at all): MC, ATC, AVC, AFC? b. Suppose...
By finding the trace of the appropriate coherency matrix, show that the average intensity transmitted by a polarization analyzer set at $+45^{\circ}$ to the $X$-axis can be expressed as \[...
Your friend, Diana Wood, recently completed the second year of her business and just received annual financial statements from her accountant. Wood finds the income statement and balance sheet...
Find the derivative of the function. P(t) = 21+ t/7 P'(t) x
Campus Theater adjusts its accounts every month. The companys unadjusted trial balance dated August 31, 2015, is on page 176. Additional information is provided for use in preparing the companys...
A company has assets with a market value of $100. It has one outstanding bond issue, a zero coupon bond maturing in two years with a face value of $75. The risk-free rate is 5 percent. The volatility...
Critique each of the three methods of calculating value at risk, giving one advantage and one disadvantage of each?
An important problem in manufacturing is the assembly line balancing problem. When setting up a manufacturing line, activities must be assigned to workstations. The maximum time spent at a...
Ryan Corporation manufactures auto steering systems. Prime cost and machine time estimates for one unit of the product for the year follow: Direct materials $ 2 6 0 Direct labor ( $ 1 8 / hour ) $ 4...
At the end of November 202 Upper X, the total amount of Social Security, $ 490, and Medicare, $ 275, was withheld as tax deductions from the employees of Rapid Waters, Inc. Federal income tax of $ 2...
What is biological extinction (extinction)? What is an endemic species and why are such species vulnerable to extinction? Define and distinguish between the background extinction rate and mass...
In the simulation, Jack and Susie demonstrate both negative and positive affect toward one another. Give several examples of each. Gottman speculates that showing interest in one another is a...
How does our organization strategically communicate performance expectations, deliver regular performance feedback, and facilitate meaningful performance discussions between managers and employees to...
Samson Company operates a mail order business and has three major activities: order taking, packaging, and returns. Customers call into the order taking department to place their orders. It takes the...
Use multiplication or division of power series to find the first three nonzero terms in the Maclaurin series for each function. y = e x2 cos x
Consider the numbers in the previous question. Assume that if the peso were to depreciate, investors figure it will depreciate by 25%. Also, assume that if the Argentine bank were to default on its...
Consider a 10-year Brady bond issued by Brazil. The coupon payment is 6.50%, and the par value has been collateralized by a U.S. Treasury bond. The current price of the bond is $98 (per $100 in par...
At the height of the Mexican peso crisis in January 1995, the default probabilities on U.S. dollardenominated emerging-market bonds were quite high. A British investment bank, assuming that these...
Choose from the following topics to create discussion: Humanity and the Natural Environment Housing and Home Furnishings Privacy and Socializing
On December 31, 2020, Pearl Company had $1,101,000 of short-term debt in the for January 21, 2021, the company issued 22,800 shares of its common stock for $42 per brokerage fees and other costs of...
During your interview process for the position of program manager for Booker, Tee, and How you are asked to explain the relationship between cost, schedule, and performance? what is your answer to...

Interpret the following statements about value at risk so that they would be easily understood by a

Question:

Step by Step Answer:

a There is a 001 probability that ...View the full answer

Introduction To Derivatives And Risk Management

Students also viewed these Finance questions