Historical Simulation as a Method of Computing VaR Has the Following

question 18

Multiple Choice

Historical simulation as a method of computing VaR has the following major benefit in comparison to the delta-normal method:

• A) It is a faster approach.
• B) It uses past returns to forecast future returns.
• C) It requires the same number of parameters as the delta-normal method.
• D) It does not assume normality of the P&L return distribution.

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Definitions:

Future Aspirations

The hopes or ambitions of achieving something in the future.

Equivalence Principle

The continuing redistribution of energy within a personality; if the energy expended on certain conditions or activities weakens or disappears, that energy is transferred elsewhere in the personality.

Psychic Energy

A concept in psychoanalytic theory referring to the energy produced by instinctual drives and processes.

Opposing Processes

A principle in psychology that refers to the idea that every process triggers an opposite counter-process, aiming to maintain homeostasis or balance.