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NEW QUESTION: 1
What is the 1-day VaR at the 99% confidence interval for a cash flow of $10m due in 6 months time? The risk free interest rate is 5% per annum and its annual volatility is 15%. Assume a 250 day year.
A. 0
B. 1
C. 2
D. 3
Answer: C
Explanation:
Explanation
The $10m cash flow due in 6 months is equivalent to a bond with a present value of 10m/(1.05)