Consider the Following Discrete Probability Distributions of Payoffs for 3

question 5

Multiple Choice

Consider the following discrete probability distributions of payoffs for 3 securities that are held in a DI's trading portfolio (payoff amounts shown are in $millions) : What is the one-day, 99% confidence level, value at risk (VAR) of securities Alpha and Beta, respectively (in millions) ?

• A)$3 and $25.50
• B)$3 and $0.75
• C)$248 and 248
• D)$300 and $300
• E)300 and 3,300

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Definitions:

Performance Standard

The expected level of performance that serves as a benchmark to evaluate an employee's job performance.

Incentive Payments

Financial rewards given to employees to encourage or reward them for achieving particular goals or performing at a superior level.

Entitlement

A right granted by law or contract, especially to financial benefits from the government.

Bonus

An incentive payment that is supplemental to the base wage.