7-10 FIs typically are concerned about the value at risk of their trading portfolios.

Question

Quizplus · Accepted Answer

FIs, especially those involved in trading activities, are concerned about the potential losses they may face due to adverse market movements. Value at risk (VaR) is a popular risk management measure that quantifies the potential loss from a trading portfolio over a certain time period with a certain level of confidence. By calculating VaR, FIs can establish risk limits, monitor their exposure to market risk, and take corrective actions if necessary. Therefore, FIs typically pay close attention to VaR when managing their trading portfolios.

7-10 FIs Typically Are Concerned About the Value at Risk