Question
(a) Find the value at risk (VaR) for an investment of $100,000 at 3 %. (That is, find out how low the value of this
(a) Find the value at risk (VaR) for an investment of $100,000 at 3 %. (That is, find out how low the value of this investment could be if the worst 3% of outcomes are ruled out.) The investment is expected to grow during the year by 8% with SD 20%. Assume a normal model for the change in value. (b) To reduce the VaR to 17000$, how much more expected growth would be necessary? Assume that the SD of the growth remains 20%. (a) The value at risk (VaR) for an investment of $100,000 at 3% is $ nothing. (Round to the nearest thousand dollars as needed.) (b) The necessary expected growth to reduce the VaR to $ is to 17000%. (Round to the nearest percent as needed.)
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