Question: The difference between stress-testing and back-testing is that: Group of answer choices Stress-testing is conducted if current market environment is stressed and back-testing is conducted

The difference between stress-testing and back-testing is that:

Group of answer choices

Stress-testing is conducted if current market environment is stressed and back-testing is conducted on past VaR data.

Stress-testing is conducted to test how well VaR performs in extreme market movements and back-testing ascertains how well VaR has performed in the past.

Stress-testing in conducted when markets are in recession and back-testing is related to historical VaR calculation.

Stress-testing is conducted when markets are in recession and back-testing is conducted when markets are in normal conditions.

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