Var value at risk
Value at risk ( VaR ) is a statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over a specific time frame. This metric is most commonly used by investment and commercial banks to determine the extent and occurrence ratio of potential losses in their institutional . A: Value at risk ( VaR ) is one of the most widely known measurements in the process of risk management. Topically, VaR accomplishes all . The VaR of a portfolio is the worst loss expected to be suffered over a given period of time with a given probability.
The time period is known as the holding perio and the probability is known as the confidence interval.
VaR is not an estimate of the worst possible loss, but the largest likely loss. What is the most I can lose on this investment? This is a question that almost every investor who has invested or is considering investing in a risky asset asks at some point in time. Value at Risk tries to provide an answer, at least within a reasonable bound. A risk management model that calculates the largest possible loss that an institution or other investor could incur on a portfolio.
Value at risk describes the probability of losing more than a given amount of assets, based on a current portfolio. Read more