Which of the Following Is True of the Historical Simulation

question 9

Multiple Choice

Which of the following is true of the historical simulation method for calculating VaR?

• A) It fits historical data on the behavior of variables to a normal distribution
• B) It fits historical data on the behavior of variables to a lognormal distribution
• C) It assumes that what will happen in the future is a random sample from what has happened in the past
• D) It uses Monte Carlo simulation to create random future scenarios

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Definitions:

Portion Control

The act of regulating the amount of food one consumes, often to maintain or achieve a healthy weight.

Bone Thickening

The increase in bone density and strength, often as a response to physical activity or as part of the aging process.

Bone Thinning

A condition, also known as osteoporosis, characterized by reduced bone density and increased fragility, leading to a higher risk of fractures.

Exercise

Physical activities undertaken to maintain or improve health and fitness.