The Calculation and Interpretation of VaR and Maximal Probable Annual

question 67

Short Answer

The calculation and interpretation of VaR and Maximal Probable Annual Loss (MPAL) is the same.In _____ contexts one often encounters the term MPAL, whereas in _____ one often encounters the term VaR.

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Definitions:

Par Value

The face value of a bond or stock as stated on the certificate or instrument, not necessarily its market value.

Mature

Refers to when a bond reaches its expiry date-payback or when a market or company has reached a state of equilibrium with little growth.

Subordinated Debenture

A type of unsecured debt that ranks below other debts and securities in terms of claims on assets or earnings in the event of a liquidation.

Bankruptcy

The legal status of a person or entity that cannot repay the debts it owes to creditors.