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(a) Find the value at risk (VaR) for an investment of $100,000 at 4%. (That is, find out how low the value of this investment
(a) Find the value at risk (VaR) for an investment of $100,000 at 4%. (That is, find out how low the value of this investment could be if the worst 4% of outcomes are ruled out.) The investment is expected to grow during the year by 9% with SD 21%.Assume a normal model for the change in value. (b) To reduce the VaR to $15,000, how much more expected growth would be necessary? Assume that the SD of the growth remains 21%.
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