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:

Insurable Interest

A stake in the value of an entity or event for which an insurance policy is purchased to mitigate risk of loss.

Consulting Partnership

A business arrangement where two or more individuals or entities collaborate to offer consulting services, pooling expertise and resources.

Insurance Company

A company that offers financial protection to individuals and entities against potential losses or damages in exchange for payment of premiums.

Innocent Misrepresentation

A false statement made by someone who believes it to be true, which can lead to a contract being voided if it influenced the agreement.