Exhibit 10-1 Cerra Co. Expects to Receive 5 Million Euros Tomorrow as Tomorrow

Exhibit 10-1
Cerra Co. expects to receive 5 million euros tomorrow as a result of selling goods to the Netherlands. Cerra estimates the standard deviation of daily percentage changes of the euro to be 1 percent over the last 100 days. Assume that these percentage changes are normally distributed. Use the value-at-risk (VAR) method based on a 95% confidence level for the following question(s) .
-Refer to Exhibit 10-1. What is the maximum one-day loss if the expected percentage change of the euro tomorrow is 0.5%?

A) -0.5%
B) -2.2%
C) -1.5%
D) -1.2%