A Portfolio Has a 2

question 23

Multiple Choice

A portfolio has a 2.0% chance of losing 15% or more according to the VaR when T = 1. This can be interpreted to mean that the portfolio is expected to have an annual loss of 15% or more once in every how many years?

• A)1
• B)2
• C)25
• D)50
• E)100

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Definitions:

Compound Growth

The process where the value of an investment increases exponentially over time due to earning interest on both the initial principal and the accumulated interest.

Evaluate

To assess or determine the value, significance, or condition of something through careful examination and analysis.

Evaluate

The process of determining the value or significance of something through analysis or assessment.

Prorata Interest

Interest calculated proportionally, based on the fraction of the period for which the interest is accrued.