The Primary Mechanism for Estimating Potential Losses Is Mathematical Methodology

question 162

Multiple Choice

The primary mechanism for estimating potential losses is mathematical methodology, value at risk ("VaR") which estimates the exposure to market risk:

• A) Within a given level of risk, over a defined time period
• B) Within a given financial arrange over a specified level of risk
• C) Within an unlimited time period over a specified level of risk
• D) None of these

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Definitions:

Normative Economics

An area of economics that makes assessments of economic fairness or desired economic outcomes and aims of public policy.

Consequences

The outcomes or effects resulting from a particular action or set of conditions.

Negative Relationship

A relationship between two variables, X and Y, in which a decrease in X is associated with an increase in Y and an increase in X is associated with a decrease in Y.

Positive Relationship

A situation where two variables move in the same direction, meaning as one variable increases, the other variable also increases.