To Compute a 2-Year VaR, the Average Return Is Calculated

question 25

Multiple Choice

To compute a 2-year VaR, the average return is calculated as

• A) Twice the 1-year return
• B) Being equal to the 1-year return
• C) The 1-year return multiplied by (1 + the 1-year return)
• D) (1 + one-year return)²
• E) Taking square root of the 1-year return

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Definitions:

Investment

The allocation of resources, such as capital or time, with the expectation of generating a future return.

Present Value

The current value of a future amount of money, calculated using a specific interest rate to account for the time value of money.

Annual Cash Operating Costs

Refers to the total amount of cash expenditures that a business incurs within one year to maintain its operations excluding non-cash expenses.

New Bus

A recently manufactured bus, not previously used or owned, often equipped with the latest features and technology.