Which of the Following Is the Interpretation of a VAR

question 47

Multiple Choice

Which of the following is the interpretation of a VAR of $5 million for one year at 5 percent probability.

• A)the probability is 5 percent that the firm will lose at least $5 million in one year
• B)the probability is at least 5 percent that the firm will lose $5 million in one year
• C)the probability is 5 percent that the firm will lose $5 million in one year
• D)the probability is less than 5 percent that the firm will lose $5 million in one year
• E)none of the above

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Definitions:

Temporal Precedence

Temporal precedence refers to a chronological relationship in which a cause precedes its effect in time, indicating a possible causal relationship.

Covariation

The degree to which two variables vary together, which is used to suggest a potential causal relationship between them.

External Forces

Outside influences for change.

Competitors' Actions

involves analyzing and responding to the strategies, movements, and decisions made by rival businesses in the marketplace.