3. Explain to the fund's directors what the VaR of the SPY means, what it measures, and how the investment committee might use it to measure the risk of the S&P 500. Assess the current diversification of the ACCF portfolio and the level of risk it poses. The investment committee needs to determine the risk posed by the current fund holdings. This is known as the portfolio VaR. The committee is concerned about both short-term and mid- term risk. Generally, management of short-term risk is believed to manage long-term risk. 4. Calculate the portfolio VaR for the ACCF portfolio. a. Calculate the daily VaR with 95% confidence and 99% confidence. b. Calculate the monthly VaR with 99% confidence. Options: Consider the historical and parametric approaches, as noted in Question 1. 5. Comment on the role of diversification in managing risk relative to holding only the SPY