Question: Short answer questions. Points are listed for each question Explain how you would use Value at Risk (VAR) as a way to measure market risk.

Short answer questions. Points are listed for each question Explain how you would use Value at Risk (VAR) as a way to measure market risk. Also explain some of the limitations of the VAR measure. (5 points) 1. 2. In terms of measuring market risk, backtesting is a method for evaluating your Value at Risk (VAR) The graph below. plots the results of a backtest of a specific trading scenario. The dots are the Profit and loss (Pnl.) each day, and the lines are the VAR. Is this a good or bad backtest? Explain your answer. (5 points) 1000

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