Mr. Fazli is handling a portfolio has 5 days 98% VAR is $5M. The recommended multiplier (K) for capital allocation was increase from 2 to 2.5 as a part of the restructuring to streamline the market risk policies across the department. Moreover, the streamline comprises the change of 97.5% VAR to 99% VAR.

a) Compute the capital should be allocated before streamline. (3 marks)

b) Compute the VAR for 99% confidence level for 5 days. (6 marks)

c) Compute the capital should be allocated after streamline. (3 marks)

d) Compute the percentage increase of capital after streamline. (3 marks)

e) Propose any TWO (2) ways on how to get sufficient fund to meet the increase the capital requirement for 5 days. (5 marks)