Consider the following hypothetical foreign exchange portfolio.What are the daily earnings at risk for the portfolio?
A)$200 / 0.45 = $444.44
B)$200 * 0.45 = $90.00
C)($200 / 0.45) / 100 = $4.44
D)($200 * 0.45) / 100 = $0.90

Question

Quizplus · Accepted Answer

To calculate daily earnings at risk for the portfolio, we need to calculate the dollar value of the portfolio and then calculate the potential one-day loss based on a given confidence interval. Here, the portfolio is worth $200 and the confidence interval is 45% (or 0.45). Multiplying these two numbers gives us $90 as the daily earnings at risk for the portfolio. Therefore, the answer is B.

Consider the Following Hypothetical Foreign Exchange Portfolio