The company Riskalot has assets with a current value of $120. The value of assets at future moments in time is normally distributed. One week from now the value of assets will be normally distributed with a mean of $121 and a variance of 144.

1. (a)What is the 1% Value-at-Risk level on a 4-week horizon?
2. (b)Suppose the value of Riskalot's assets are perfectly positively correlated with the gold price. Riskalot also has a debt issue outstanding with a principal value of $100, due to be repaid in one year's time. What would you advise Riskalot's CFO to do to ensure that the company will be able to repay its debt?
3. (c)Riskalot's CEO likes simplicity in the management reports she receives to make decisions about the future of the company. She's proposing to use Value-at-Risk as the only risk measure moving forward. Based on what you know about Riskalot's balance sheet, do you agree with her? Why or why not?