Which One of the Following Is the Primary Purpose of the Value-At-Risk

question 23

Multiple Choice

Which one of the following is the primary purpose of the Value-at-Risk computation?

• A) determine the 99 percent probability range given an abnormal distribution
• B) evaluate the risk-return tradeoff for a given mix of securities
• C) evaluate the probability of a significant loss
• D) determine the portfolio that maximizes the risk premium per unit of total risk
• E) determine the portfolio that maximizes the excess return per unit of systematic risk

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Definitions:

Decomposer

Organism, usually a bacterium or fungus, that breaks down organic matter into inorganic nutrients that can be recycled in the environment.

Mushroom

A type of fungus characterized by a cap and stem, with many species producing edible or medicinal fruiting bodies.

Herbivore

Primary consumer in a grazing food chain; a plant eater.

Plant Foods

Edible parts of plants, including fruits, vegetables, grains, nuts, and seeds, that are consumed by humans and other herbivores.