Assume that the dollar market value of a position is $100 000 and the price volatility is 1.50 per cent. What are the daily earnings at risk for this position (round to two decimals)?
A) $150.00
B) $1500.00
C) $15 000.00
D) Not enough information to solve the question.

Question

Quizplus · Accepted Answer

The daily earnings at risk can be calculated by multiplying the dollar market value by the price volatility and multiplying the result by the confidence level. Assuming a confidence level of one standard deviation (which is common in finance), the calculation would be:
$100,000 * 1.50% * 1 = $1,500
Therefore, the correct answer is B.

Assume That the Dollar Market Value of a Position Is