) AN ADVANTAGE OF THE BANK'S METHOD FOR ESTIMATING VAR IS THE

3.) An advantage of the bank's method for estimating VaR is the:

A.

simplicity of the method.

B.

assumption that returns are normally distributed.

C.

ability to incorporate optionality into the analysis.

Answer = A

The analytical model uses readily available data and simple calculations.

“Risk Management,” by Don M. Chance, Kenneth Grant, and John Marsland