You Have Computed the Expected Return Using VaR with a 2.5

question 47

Multiple Choice

You have computed the expected return using VaR with a 2.5% probability for a 1-year period. How would this expected return be expressed on a normal distribution curve?

• A)lower tail starting at the point that is 2.5 standard deviations below the mean
• B)lower tail of a 95% probability range
• C)the point that corresponds to 2.5 standard deviations below the mean
• D)the point that represents the lower end of the 90% probability range
• E)the negative range that lies within 2.5 standard deviations of the mean

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Definitions:

Debenture

A type of debt instrument that is not secured by physical assets or collateral.

Interest Rate

The fee a lender imposes on a borrower for the utilization of assets, represented as a proportion of the principal amount.

Large Banks

Financial institutions with a significant presence and assets, offering a wide range of financial services.

LIBOR

The London Interbank Offered Rate, which is the average interest rate at which major global banks lend to one another.