Limitation to VaR Include I

question 61

Multiple Choice

Limitation to VaR include I. Basic VaR calculations assume returns on portfolios are normally distributed
II) VaR is sensitive to the time period chosen
III) VaR does not specify the maximum possible loss
IV) VaR is not easy to understand

• A) I and II
• B) I, II and III
• C) I, II and IV
• D) II, III and IV
• E) I, II, III and IV

---

Definitions:

Optimal Consumption Bundle

The consumption bundle that maximizes a consumer’s total utility given that consumer’s budget constraint.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford, based on income and prices.

Marginal Utility

The additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service.

Iced Tea

A chilled form of tea, often sweetened and served with ice, popular as a refreshing beverage.