Explain the Basic Concept of the RiskMetric Model

question 13

Essay

Explain the basic concept of the RiskMetric model.What are the major disadvantages? How can the major disadvantages be addressed?

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Definitions:

Standard Normal

Standard normal refers to a normal distribution with a mean of 0 and a standard deviation of 1.

Area

The quantifiable space within the boundaries of a two-dimensional shape, measured in square units.

Standard Normal

A normal distribution with a mean of 0 and a standard deviation of 1, used as a basis for comparison with other normal distributions.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values; a low standard deviation indicates that the values tend to be close to the mean, whereas a high standard deviation indicates that the values are spread out over a wider range.