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CIMAPRA19-P03-1 Exam - Topic 2 Question 78 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 78
Topic #: 2

[All CIMAPRA19-P03-1 Questions]

Which of the following best describes the relevance of value at risk (VaR) as a decision tool?

AVaR quantifies past volatility

BVaR quantifies future volatility

CVaR quantifies the maximum loss that could ever be incurred

DVaR can only measure downside risk

Show Suggested Answer

Suggested Answer: A

by Davida at Jan 05, 2026, 05:16 AM

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Verdell

2 months ago

D is too limiting. VaR should measure overall risk, not just downside.

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Millie

2 months ago

A is interesting too. Past data can help inform decisions.

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Terina

2 months ago

I agree, B makes sense. We need to predict future volatility.

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Bernadine

2 months ago

I think B is the best choice. It looks at future risks.

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Louisa

2 months ago

I’m surprised people still rely on VaR for decision-making!

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Salley

3 months ago

Wait, does it really only measure downside risk?

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Dana

3 months ago

I think it’s more about future volatility, though.

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Sonia

3 months ago

Totally agree, it's all about historical data!

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Evette

3 months ago

VaR quantifies past volatility.

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Graciela

3 months ago

Option B is a bit misleading. VaR doesn't really quantify future volatility, it just gives an estimate.

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Shawnta

3 months ago

Haha, VaR is like a crystal ball for traders - it can predict the future... or at least that's what they tell us.

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Andra

4 months ago

D is the correct answer. VaR is specifically designed to measure downside risk, not overall volatility.

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Catherin

4 months ago

I'd go with C. VaR is supposed to quantify the maximum loss, not just volatility.

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Albert

4 months ago

Option B seems the most accurate. VaR is a forward-looking metric that estimates potential future losses.

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Roselle

5 months ago

I feel like VaR can show maximum loss, but it’s not the absolute worst-case scenario, so option C seems off to me.

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Lashanda

5 months ago

I practiced a question similar to this, and I recall that VaR doesn't capture all risks, just the downside.

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Belen

5 months ago

I think VaR is about estimating potential future losses, so I might lean towards option B.

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Janine

5 months ago

I remember VaR is often used to assess risk, but I'm not sure if it focuses more on past or future volatility.

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Armanda

5 months ago

B seems like the best fit to me. VaR is supposed to give us a forward-looking estimate of volatility, which is super useful for decision-making.

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Joesph

5 months ago

I'm pretty confident that D is incorrect. VaR can definitely measure more than just downside risk - it looks at the overall distribution of potential outcomes.

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Latonia

6 months ago

Hmm, I'm leaning towards C. Isn't the whole point of VaR to quantify the maximum potential loss? That seems like the most relevant use of it as a decision tool.

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Queenie

6 months ago

I'm a bit confused on this one. I know VaR has something to do with risk, but I'm not sure if it's just about downside risk or if it can measure other types of risk too.

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Bettina

6 months ago

I think B is the best answer here. VaR is supposed to give us a sense of future volatility, not just past volatility.

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Ula

But isn't it also about past data? A has its merits.

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Benton

2 months ago

I agree with you, B makes the most sense.

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