3. Risk identification: [27 marks) In this part, you should discuss the risk prole of your portfolio. Use daily historical stock price between lst October 2017 and Friday, 11st March 2022 to calculate the Vail of your Portfolio. The discussion should include the fo]lowing points: El. Calculation and discussion of the oneday 95%Value at Risk of each stock in your portfolio using historical simulation approach. That means, if you have four stocks in total, you need VaR for each. (10 marks) Calculation and discussion of the fiveday 99%Value at Risk of your portfolio using model building approach. Show key steps of workings. (3 marks) Calculation and discussion of the fiveday 99%Value at Risk of your portfo]io using a historical simulation approach. [3 marks) Discuss the performance of Vail in (b) and (c), by comparing your calculated VaR results and the portfolios' actual veday returns (Monday, 14th March 2022 to F riday, 18111 March 2022). (5 marks) Calculation and discussion of the 95%Expected Shortfall {CVaR) of your portfolio using a historical simulation approach. (6 marks) 4. Hedging using Options: (12 marks) a. On any day between Monday, 141?! March 2022 and the assessment due date, how will you use the option contract to hedge one of your three selected stocks in your Portfoliol. You need to determine and explain which option you want to use {i.e., specify whether it is a call or put, when the expiration date is, appropriate strike price, whether you should go long or short, number of contracts, etc.). Provide justification for your decision- (7 marks) Note: If you are not able to backdate historical price for the option, feel free to use the available price whenever you start drafting the answer to this question. For example, if your start to look at this question on l4th April 2022, and cannot nd the historical option price on Thursday, 315i; March 222, then it is fine to use the option price on 14th April 2022. h. Discuss when you will exercise your option and its potential payoff. (5 marks) 5. The professionalism of the report. (e.g., Usage of professional Figures and Tables, with numbering and captions.) (4 marks) 1You can choose any stock from the three stocks you selected for the Portfolio