An Advantage of the Historic or Back Simulation Model for Quantifying

question 41

Multiple Choice

An advantage of the historic or back simulation model for quantifying market risk includes

• A)calculation of a standard deviation of returns is not required.
• B)all return distributions must be symmetric and normal.
• C)the systematic risk of the trading positions is known.
• D)there is a high degree of confidence when using small sample sizes.
• E)None of the options.

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Definitions:

Apples

In economic terms, apples can be used as an example commodity to discuss principles like supply, demand, and market equilibrium.

Oranges

A citrus fruit known for its round shape and juicy, sweet interior, widely cultivated in warm climates.

Contract Curve

Represents the set of optimal allocations of resources between two agents in an economy, where no party can be made better off without making the other party worse off.

Utilities Possibilities Frontier

A curve depicting all possible allocations of goods and services that maximize two or more parties' utility under a given condition.