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Company A is based in country A with the AS as its functional currency. It expects to receive BS20 million from Company B in settlement of an export invoice.
The current exchange rate is A$1 =B$2 and the daily standard deviation of this exchange rate = 0 5%
What is the one-day 95% VaR in AS?
Suggested Answer: A, B, E
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33 comments · newest first
VI
Vi
11 months ago
Just to clarify, the standard deviation is 0.5%, right?
CE
Celestina
11 months ago
Totally agree, A$82,250 makes sense with the given volatility.
LA
Lashandra
12 months ago
Wait, how can the VaR be that low? Seems off to me.
AN
Annalee
12 months ago
I think the VaR calculation should be around A$82,250.
BR
Brinda
12 months ago
The expected amount is BS20 million, so that's A$10 million at the current rate.
TW
Twanna
1 year ago
I feel like I might have seen a similar question in our review sessions. If I recall correctly, the VaR should be based on the expected cash flow in AS and the volatility of the exchange rate.
SE
Selene
1 year ago
I think the daily standard deviation is crucial here, but I'm a bit confused about how to apply it to find the 95% VaR. I hope I remember the right multiplier!
MA
Magnolia
1 year ago
This question seems similar to one we practiced where we had to convert currencies and apply the VaR formula. I think I need to double-check the calculations for the exchange rate.
ST
Stefanie
1 year ago
I remember we calculated VaR using the standard deviation and the value at risk formula, but I'm not sure about the exact steps for this one.
NO
Nohemi
1 year ago
This seems straightforward enough. I just need to plug the numbers into the VaR formula and do the calculation. As long as I don't make any silly mistakes, I should be able to get the right answer.
IV
Ivory
1 year ago
Okay, I think I've got this. I'll need to calculate the potential change in the exchange rate at the 95% confidence level, then apply that to the expected receivable amount to get the VaR.
LA
Layla
1 year ago
Hmm, I'm a bit unsure about the steps here. I'll need to think through the formula for VaR and make sure I apply it correctly given the exchange rate information.
RE
Reynalda
1 year ago
This looks like a standard VaR calculation problem. I'll need to find the one-day 95% VaR in the functional currency of Company A.
ES
Essie
1 year ago
Hmm, I'm a bit confused by the state machine diagram. I'll need to study the transitions and actions more closely to figure out the right answer.
WI
Willard
1 year ago
I've got a strategy for this. I'll focus on the key details and try to logically work through the options.
ED
Edward
1 year ago
I'm a bit unsure about this one. Does the question mean that the web app and Cognitive Search service need to be in the same virtual network, or just that the Cognitive Search service needs a private endpoint in the same virtual network as the web app? I'll need to double-check the requirements.
AL
Aleshia
1 year ago
This seems like a straightforward question about file system management. I'll think through the options carefully and choose the one that best fits the description.
LE
Leontine
1 year ago
Ugh, VaR calculations always give me a headache. I wish they'd just ask about something more straightforward, like foreign currency translation.
BO
Bong
1 year ago
C) A$82,250
LY
Lynelle
1 year ago
B) A$164,500
CH
Cheryll
1 year ago
A) A$50,000
JU
Justine
1 year ago
Alright, let's think this through step-by-step. I've got this!
AL
Albina
1 year ago
Jules: C) A$82,250
CY
Cyndy
1 year ago
Keneth: B) A$164,500
JU
Jules
1 year ago
Jovita: A) A$50,000
KE
Keneth
1 year ago
User 3: What is the one-day 95% VaR in AS?
JO
Jovita
1 year ago
User 2: The current exchange rate is A$1 = B$2.
RO
Rosendo
1 year ago
User 1: So, Company A is based in country A with AS as its functional currency.
JO
Joseph
1 year ago
Hmm, the daily standard deviation of the exchange rate is given as 0.5%. I wonder if that's a typo or if it's meant to be a trick.
MI
Mireya
2 years ago
This seems like a tricky question. I'd better review my notes on value at risk (VaR) calculations.
LO
Lorenza
2 years ago
I'm not sure, but I think the correct answer is C) A$82,250.
AN
An
2 years ago
I agree with Benton, the one-day 95% VaR in AS should be A$164,500.
BE
Benton
2 years ago
I think the answer is B) A$164,500.