The Value at Risk (VAR) Is Typically Defined as The

question 6

Multiple Choice

The value at risk (VAR) is typically defined as the:

• A)5th percentile of NPV distribution
• B)10th percentile of NPV distribution
• C)90th percentile of NPV distribution
• D)95th percentile of NPV distribution

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Definitions:

Current Yield

A measure of the annual income (interest or dividends) generated by an investment, expressed as a percentage of the current market price.

Par Value

The face value of a bond or stock as stated by the issuing company, which may differ from its market value. For bonds, it's the amount to be repaid at maturity; for stocks, it's the nominal value assigned upon issuance.

Callable Bond

A type of bond that gives the issuer the right to redeem the bond at a predetermined price before its maturity date.

Yield To Call

The rate of return anticipated on a bond if it is held until the call date, before the bond's maturity date.