- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 41. Measuring and Managing Market Risk
- Subject 1. Value at Risk
CFA Practice Question
A 5% VaR implies a ______.
B. 5% chance of a downward move
C. 2.5% chance of a downward move and a 2.5% chance of an upward move
A. 5% potential minimum loss
B. 5% chance of a downward move
C. 2.5% chance of a downward move and a 2.5% chance of an upward move
Correct Answer: B
For investors, risk is about the odds of losing money, and VaR is based on that common-sense fact.
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