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Basic Question 3 of 3
A portfolio may remain under its VaR limit each day but cumulatively lose more than expected. This is known as "trending." Which constraint is the best candidate for managing trending?
B. A scenario limit
C. A stop-loss limit
A. A position limit
B. A scenario limit
C. A stop-loss limit
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Learning Outcome Statements
explain constraints used in managing market risks, including risk budgeting, position limits, scenario limits, and stop-loss limits;
explain how risk measures may be used in capital allocation decisions.
CFA® 2025 Level II Curriculum, Volume 5, Module 41.