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Basic Question 9 of 19

Which risk measure answers the question of "how much can I expect to lose if VaR is exceeded"?

A. VaR
B. Conditional VaR
C. Incremental VaR

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Colin Sampaleanu

Colin Sampaleanu

Learning Outcome Statements

explain the use of value at risk (VaR) in measuring portfolio risk;

compare the parametric (variance -covariance), historical simulation, and Monte Carlo simulation methods for estimating VaR;

estimate and interpret VaR under the parametric, historical simulation, and Monte Carlo simulation methods;

describe advantages and limitations of VaR;

describe extensions of VaR;

CFA® 2025 Level II Curriculum, Volume 5, Module 41.