What are VaR (value at risk) models? How important are they? Do you think Mandelbrot or...

What are VaR (value at risk) models? How important are they? Do you think Mandelbrot or Malkiel would recommend them? Would you use them? How?

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Expert Solution

value at risk models are the models which will be determining the overall value in the portfolio which is exposed to high amount of risk.

value of risk is known for quantification of the risk of a specific portfolios and it will also be trying to segregate various kind of risk in order to determine the overall value in the portfolio which is subjected to risk

they are very important because if we are trying to formulate a position or we are trying to enter into a project they will be trying to provide us with a proactive estimation about our level of risk into entering of the the position and they will be helping us to manage those positions regularly by continuously modifying the risk levels according to the changing needs in the external environment.

Yes I will be thinking that mandelbrot or malkeil will be recommending them because they are leading to reduction of a risk to a large extent and I am using them in management of my portfolio by determining the overall portfolio which is exposed to high risk and I am quantifying risks regularly using value at risk.

jeff jeffy answered 1 year ago

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