A popular measure of risk in corporate finance called the value at risk (VaR),which is defined as:
A)the best return from a high risk investment.
B)the worst loss that is possible under normal market conditions.
C)the worst possible loss under any market conditions.
D)the worst return from a low risk investment.

Question

Quizplus · Accepted Answer

VaR is a measure of the maximum potential loss that can happen in a portfolio under normal market conditions with a certain level of confidence. It is not the worst loss that could happen under any market condition or the worst return from a low-risk investment. Therefore, option B, which states that VaR is the worst loss possible under normal market conditions is the correct answer.

A Popular Measure of Risk in Corporate Finance Called the Value