The gain from a project is equally likely to have any value between -$0.15 million and +$0.85 million.What is the 99% value at risk?
A) $0.145 million
B) $0.14 million
C) $0.13 million
D) $0.10 million

Question

Quizplus · Accepted Answer

The gain is uniformly distributed between −0.15 and +0.85 million dollars.The probability that it will be between −0.15 and −0.14 million dollars is therefore 1%.This means that there is a 99% chance that the loss will not be greater than $0.14 million.This is the 99% VaR.

The Gain from a Project Is Equally Likely to Have