The Use of Expected Shortfall (ES) Is Most Appropriate When

question 60

Multiple Choice

The use of expected shortfall (ES) is most appropriate when

• A)there is a small sample size used to estimate probability distributions.
• B)the VaR indicates there is no possibility of losses so another method must be used to determine market risk.
• C)the probability distribution is skewed to the right.
• D)a continuous probability distribution cannot be constructed
• E)The probability distribution indicates there is a possibility of a "fat tail" loss.

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Definitions:

Lease Agreement

A contract in which one party agrees to rent property owned by another party for a specified period of time, in exchange for payment.

Offer Agreement

A detailed proposal by one party to enter into a contract, subject to acceptance by another party.

Adhesion Contract

A standardized contract prepared by one party, with little to no negotiation allowed, often in situations with unequal bargaining power.

Definite Offer

An offer that is clear, specific, and leaves no room for negotiation, often containing all the terms necessary for an enforceable agreement.