Value at Risk (VAR) has become a key concept in financial calculations. The VAR of an investment is defined as that value v such that there is only a 1 percent chance that the loss from the investment will be greater than v. (a) If the gain from an investment is a normal random variable with mean 10 and variance 49 determine the VAR. (IfX is the gain, then ?X is the loss.)
(b) Among a set of investments all of whose gains are normally distributed, show that the one having the smallest VAR is the one having the largest value of mean minus standard deviation*2.33?

Var = 6.31

Step-by-step explanation:

The Value at Risk (VAR)

By using normal distribution

Mean = 10

Variance = 49

Standard deviation

This implies that:

Using the z-table;

Hence, there exist 1% chance that X < -6.31 or the loss from investment is > 6.31

From the calculated value above;

; Since the result is negative, then it shows that the greater the value(i.e the positive or less negative it is ) the lower is the value of VAR. Thus, the least value of VAR is accepted by  the largest value of

answer: b.

step-by-step explanation:

it is b. cause the equations are put in the right category

answer:

what is your question that you ask

step-by-step explanation: