1 a critical drawback of the historical simulation approach, Ask an Expert

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1. A critical drawback of the historical simulation approach for estimating VaR is that:

a. It is dependent of normality assumption

b. It ignores the risks not represented in the historical data set

c. Is simple to compute

d. It provides biased estimates if historical data contains extreme values

2. Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 5.98 percent. The initial outlay is $359,644.

Year 1: 193,475

Year 2: 183,753

Year 3: 153,569

Year 4: 133,270

Year 5: 184,444

Round the answer to two decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92873629

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