Which one of the following is the primary purpose of the Value-at-Risk computation?
A)determine the 99% probability range given an abnormal distribution
B)evaluate the risk-return tradeoff for a given mix of securities
C)evaluate the probability of a significant loss
D)determine the portfolio that maximizes the risk premium per unit of total risk
E)determine the portfolio that maximizes the excess return per unit of systematic risk

Question

Quizplus · Accepted Answer

The primary purpose of Value-at-Risk (VaR) computation is to evaluate the probability of a significant loss. VaR measures the maximum expected loss of a portfolio or investment over a given time period with a certain level of confidence. It is commonly used in risk management to assess and manage potential losses in a portfolio. While options A, B, D, and E may also pertain to investment analysis and management, they are not the primary purpose of VaR computation.

Which One of the Following Is the Primary Purpose of the Value-At-Risk