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CIMAPRO19-P03-1 Exam - Topic 3 Question 98 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 98
Topic #: 3
[All CIMAPRO19-P03-1 Questions]

Will owns $400,000 of shares in Company X.

Company X has a daily volatility of 1% of its share price.

Calculate the 28 day value at risk that shows the most Will can expect to lose during a 28 day period.

(Will wishes to be 90% certain that the actual loss in any month will be less than your predicted figure).

Give your answer to the nearest $000.

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Suggested Answer: A

by Goldie at Oct 29, 2025, 04:21 PM

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Margarita
2 days ago
I feel like the answer is around $27,000. It fits the 90% confidence level.
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Reita
7 days ago
Agreed! 1% daily means we need to calculate for 28 days.
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Aileen
26 days ago
This question is tricky! I think the volatility plays a big role.
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Malissa
1 month ago
Totally agree, $27,000 sounds reasonable for a 90% confidence level!
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Felicidad
1 month ago
Wait, only $27,000? That seems way too low for that amount of shares!
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Dean
1 month ago
I think it should be less than that, maybe around $27,000?
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Alyssa
2 months ago
So for 28 days, that's about $56,000 max loss, right?
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Karol
2 months ago
The daily loss at 1% volatility is $4,000.
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Corinne
2 months ago
Haha, I bet Will's gonna be sweating bullets over this one. 28 days of 1% volatility? Yikes!
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Herminia
2 months ago
Wait, is that $27 or $27,000? The question asks for the answer to the nearest $000.
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Herman
2 months ago
90% certainty, huh? I'd double-check my math on this one.
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Tracey
2 months ago
Hmm, I'd expect the 28-day VaR to be higher than that. Gotta account for that daily volatility.
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Ty
3 months ago
I feel like I might be mixing up the calculations. Should we also consider the initial investment amount when calculating the potential loss?
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Lynelle
3 months ago
I think we practiced a similar question where we had to adjust for the time period. Is it just the daily volatility multiplied by the square root of 28 days?
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Teri
3 months ago
$27,000 seems a bit low for a $400,000 investment with 1% daily volatility.
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Carri
4 months ago
I'm a bit unsure about the 90% confidence level. Does that mean we need to use a Z-score of 1.28 for our calculations?
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Francene
4 months ago
I remember we calculated Value at Risk using the formula involving volatility and the Z-score for confidence levels.
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Glynda
4 months ago
I think I've got this. The 90% VaR means I need to find the 10th percentile of the 28-day return distribution. With a 1% daily vol, that should give me a pretty good estimate of the maximum expected loss.
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Levi
4 months ago
Hmm, I'm a bit unsure about the scaling here. Do I just multiply the daily volatility by the square root of 28, or is there some other adjustment I need to make?
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Laticia
5 months ago
This seems straightforward enough. I'll use the square root of time rule to scale up the daily volatility to a 28-day period, and then find the 90% quantile to get the VaR.
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Phuong
5 months ago
Okay, I see the daily volatility is 1% of the share price. That's a good starting point. Now I just need to figure out how to convert that to a 28-day VaR.
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Lindy
5 months ago
Hmm, this looks like a value at risk calculation. I'll need to find the daily volatility and then scale it up to a 28-day period to get the 90% VaR.
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Kris
3 months ago
Right, daily volatility is 1%.
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Rima
3 months ago
I think we need to calculate the daily loss first.
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Rodolfo
4 months ago
I believe the final figure will be around $27,000.
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