if the SPY ETF has a closingprice of USD 445.44:

(a) Estimate the one-day VaR at a 98% confidence level.

(b) Estimate the leverage you would offer to a client who wanted to borrow moneyto buy one SPY ETF if your firm requires the client to put up enough of theirown money to cover 98% of one-day moves in the market. Leverage is the relativeamounts of (i) the amount of asset the client can buy (i.e., the sum of the client'smoney and your loan to the client), divided by (ii) the amount of money the clientput up. For example, if the client puts up 5 USD and borrows 5 USD to buy anasset that costs 10 USD then the leverage is 2:1. Similarly, if the client put up 1USD and borrows 9 USD to buy an asset that costs 10 USD the leverage if 10:1.