Which One of the Following Is the Best Interpretation of This

question 77

Multiple Choice

Which one of the following is the best interpretation of this VaR statistiC: Prob (Rp ≤ -.15) = 37%?

• A)If your portfolio declines by 15 percent or more, that decline is expected to be followed by a 37 percent increase in value.
• B)Your portfolio is expected to lose at least 15 percent, but not more than 37 percent in any given year.
• C)There is a 37 percent chance that your portfolio will decline in value by at least 15 percent over the next year.
• D)Sometime in the future, your portfolio is expected to lose 15 percent or more in a single year, but have an overall average rate of return of 37 percent.
• E)There is a 37 percent chance that your portfolio will lose at least 15 percent of its value over the next 10 years.

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Definitions:

Unconscious Defense Mechanisms

Tactics used by the subconscious mind to alter, deny, or twist reality to guard against anxiety and undesirable tendencies.

Denial

A defense mechanism where confrontation with a reality or fact is avoided by denying the existence of the problem or reality.

Sublimation

A psychological defense mechanism where socially unacceptable impulses are transformed into socially acceptable actions or behavior.

Mildly Hostile Humor

Forms of humor that contain subtle or indirect expressions of hostility or criticism, often used to mask aggression or discontent.