SECTION 3.3.1. LO.I. SECTION 3.3.1. LO.I.

9. B is correct. A scenario limit establishes a limit on the loss for a given scenario, which is not

implemented by the policy drafted by Kyle. The 10-day, 2% VaR limit of $5 million is an

example of risk-budgeting. The initiation of hedges above a certain loss level is an alternative

form of a stop-loss limit called drawdown control or portfolio insurance. Section 5. LO.k.