Interpretation of VAR. - Convert the monthly VAR into an annual figure. Is the latter number consistent with the $1.6 billion loss? 

From December 1994 to December 1995, interest rates fell from 7.8% to 5.25%. Compute the probability of such an event. - It seems that both in 1994 and 1995, interest rate swings were particularly large relative to the historical distribution. 

Suggest two interpretations for this observation.