Q1: Value at risk (VaR) is the expected loss of a portfolio over a specified time period for a set level of probability. For example, if a daily VaR is stated as $85,000 to a 97% level of confidence, this means that during the day there is only a __% chance that the loss will be greater than $85,000.

Select one:

a.7%

b.85%

c.3%

d.97% Q2: Discuss why the risk associated with U.S. Bonds is considered relatively low. Provide an example of the type of projects that state and local bonds typically fund. In general, the risk on state and local bonds is usually ________and the yield is usually ________.