You are a risk analyst in a hedge fund. You have been asked to calculate the VaR of the following two fund portfolios.

Portfolio 1

Common stock of Company Q valued at USD 1,000,000

Common stock of company R valued at GBP 600,000

3-year bonds of Company S valued at USD 3,000,000

10-year bonds of Company T valued at SFR 2,000,000

Currency forward Sell (GBP 500,000)/Buy USD on 31-Dec-2020

Currency forward Sell (SFR 2,000,000)/Buy USD on 31-Dec-2020

Net position amount: $7,005,263* *(1,000,000 + 600,000*1.5 + 3,000,000 + 2,000,000/0.95)

Average combined daily return %: 0.01%

(SD) of combined daily return %: 0.46%

Confidence interval: 99%

Time horizon: 1 day

Portfolio 2

Investment: 20,000 shares of Novartis common stock listed on NYSE, closing price on 31-Dec 2018 = $86.04

Currency forward: Sell (EUR)/Buy USD 2,500,000 on 30-Jun-2020

Investment: $5,000,000 Medtronic bond, maturity 31-Dec-2023, 2.5% semi-annual coupon, BPV $2,431.23

Net position amount: Calculate using the formula shown above

Average combined daily return %: Calculate in Attachment 3

(SD) of combined daily return % Calculate in Attachment 3

Confidence interval: 95%

Time horizon: 1 month

What is the net position amount of Portfolio 2? How did you calculate it?