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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Andra

3 days ago

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

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Catherin

8 days ago

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

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Albert

14 days ago

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

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Roselle

19 days 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

24 days 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

29 days ago

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

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Janine

1 month 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

1 month 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

1 month 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

2 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

2 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

2 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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