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a) Briefly discuss the importance of market risk. (20 marks) b) Discuss the concept of Value at Risk (VaR) along with the issues encountered when measuring VaR. Graphical illustrations are welcome. (40 marks) £) Abank's 60-day average daily eamnings at risk (DEAR), for its trading portfolio, is $10,000,000. Its Tier 1 capital is $27.11m and the bank has just issued Tier 3 capital of $367.78. What is the minimum capital charge? Should the bank wish to raise extra capital, from where should the extra capital come? (40 marks) 

a) Briefly discuss the importance of market risk. (20 marks) b) Discuss the concept of Value at Risk (VaR) along with the issues encountered when measuring VaR. Graphical illustrations are welcome. (40 marks) c) A bank's 60-day average daily earnings at risk (DEAR), for its trading portfolio, is $10,000,000. Its Tier 1 capital is $27.11m and the bank has just issued Tier 3 capital of $67.78. What is the minimum capital charge? Should the bank wish to raise extra capital, from where should the extra capital come? (40 marks)
 

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a) Briefly discuss the importance of market risk. (20 marks) b) Discuss the concept of Value at Risk (VaR) along with the issues encountered when measuring VaR. Graphical illustrations are welcome. (40 marks) c) A bank's 60-day average daily earnings at risk (DEAR), for its trading portfolio, is $10,000,000. Its Tier 1 capital is $27.11m and the bank has just issued Tier 3 capital of $67.78. What is the minimum capital charge? Should the bank wish to raise extra capital, from where should the extra capital come? (40 marks) a) Briefly discuss the importance of market risk. (20 marks) b) Discuss the concept of Value at Risk (VaR) along with the issues encountered when measuring VaR. Graphical illustrations are welcome. (40 marks) c) A bank's 60-day average daily earnings at risk (DEAR), for its trading portfolio, is $10,000,000. Its Tier 1 capital is $27.11m and the bank has just issued Tier 3 capital of $67.78. What is the minimum capital charge? Should the bank wish to raise extra capital, from where should the extra capital come? (40 marks)

Answer rating: 100% (QA)

Answer a Importance of Market Risk Market risk is the potential loss that can occur due to fluctuations in financial markets including changes in interest rates exchange rates commodity prices and equ... View the full answer