Q1. Discuss the JP Morgan RiskMetrics Model for measuring market risk and explain how it can be applied for FX, equity and bond portfolios.

Q2. John Orange, Vice President of operations of ABC Bank, is estimating the aggregate DEAR of the banks portfolio of assets consisting of loans (L), foreign currencies (FX), and common stock (EQ). The individual DEARs are 25,310, 23,155, and 67,328 respectively. If the correlation coefficients _ij between L and FX, L and EQ, and FX and EQ are -0.2, 0.5, and 0.8, respectively, what is the DEAR of the aggregate portfolio?