alleryStart learning →Value at risk helps managers estimate the
Atax payable on forex gains
Bpossible loss over a set period
Cexact spot rate next month
Dnumber of days to settlement
Answer & Solution
Correct answer: B. possible loss over a set period
VaR gives the potential loss on a portfolio over a set time at a stated probability of adverse rate changes.
Keep practising Foreign Exchange Exposure and Risk Management
Browse all Foreign Exchange Exposure and Risk Management questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
European banks may use their own VaR models to setUnder the Bretton Woods system, many businessesA shift in exchange rates that changes demand for a good sold abroad is an example ofEconomic risk of foreign investment includes exchange rates, regulation andFutures cannot fully mitigate currency risk as they exist only forForward and futures contracts are similar in that bothThe Garman-Kohlhagen formula needs two interest rates becauseThe value of a European FX option is typically computed assuming the exchange rate follows