_________ assesses risk by stating the probability of a loss a portfolio that might be incurred within a stated time period given a specified probability.
A) Investment risk management
B) Market simulation
C) Value-at-risk
D) Back testing
E) Performance evaluation

Question

Quizplus · Accepted Answer

Value-at-risk (VaR) assesses risk by estimating the maximum loss that a portfolio may incur at a specified level of confidence over a specified time period. It is a widely used risk management technique that has become an industry standard for measuring market risk. VaR models attempt to capture the distribution of financial asset returns by estimating the expected return and volatility of the portfolio, and then using statistical methods to estimate possible outcomes at different levels of probability.

_________ Assesses Risk by Stating the Probability of a Loss