Banks develop statistical models to calculate their maximum loss over a given time period. This approach is known as the
A)stress-testing approach.
B)value-at-risk approach.
C)trading-loss approach.
D)doomsday approach.

Question

Quizplus · Accepted Answer

The approach described is the value-at-risk approach, where statistical models are used to calculate a bank's potential maximum loss over a given time period. The other answer choices (stress-testing approach, trading-loss approach, doomsday approach) are not accurate descriptions of this particular approach.

Banks Develop Statistical Models to Calculate Their Maximum Loss Over