When Assessing Tail Risk by Looking at the 5% Worst-Case

question 35

Multiple Choice

When assessing tail risk by looking at the 5% worst-case scenario, the VaR is the

• A) most realistic, as it is the most complete measure of risk.
• B) most pessimistic, as it is the most complete measure of risk.
• C) most optimistic, as it is the most complete measure of risk.
• D) most optimistic, as it takes the highest return (smallest loss) of all the cases.

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Definitions:

Social Categorization

The cognitive process by which people classify themselves and others into various social groups or categories, based on characteristics like race, gender, and social roles, to simplify social interactions.

Competition

A situation in which two or more parties strive for a goal that cannot be shared, often resulting in a win-lose scenario.

Conflict

A situation or process characterized by disagreement or disputes between individuals or groups, often stemming from opposing interests or opinions.

Decategorization

A strategy for reducing prejudice by encouraging individuals to perceive others as individuals rather than as members of a group.