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GARP 2016-FRR Exam - Topic 4 Question 3 Discussion

Alpha Bank estimates its 1-month, 95% VaR is 30 million EUR. This means that in the next month, there is a
C) 95% chance that AlphaBank can lose at most 30 million EUR.
A) 95% chance that AlphaBank can lose more than 30 million EUR.
B) 95% chance that AlphaBank will lose exactly 30 million EUR.
D) 95% chance that AlphaBank will at least lose 30 million EUR.

GARP 2016-FRR Exam - Topic 4 Question 3 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 3
Topic #: 4
[All 2016-FRR Questions]

Alpha Bank estimates its 1-month, 95% VaR is 30 million EUR. This means that in the next month, there is a

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Suggested Answer: C

by Daisy at Apr 29, 2025, 03:08 AM

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Pamella
7 months ago
Yeah, it's definitely not a fixed loss, just a threshold.
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Tegan
7 months ago
Wait, so it doesn't mean they'll lose exactly that? Seems confusing.
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Kent
7 months ago
I thought VaR was more about potential losses, not just a cap.
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Martha
7 months ago
Totally agree, it's about the maximum loss, not a guarantee.
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Hubert
8 months ago
VaR means there's a 95% chance of losing at most that amount.
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Francoise
8 months ago
I thought VaR was about the potential losses, but I'm confused about the wording. Does it really mean we could lose more than that amount?
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Tegan
8 months ago
I practiced a similar question, and I recall that VaR doesn't guarantee a specific loss, just a threshold. So, I lean towards option C as well.
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Hailey
8 months ago
I'm a bit unsure, but I think VaR means there's a 95% chance we won't exceed that loss, so option C sounds right to me.
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Alonso
9 months ago
I remember studying VaR, and I think it indicates the maximum loss we might expect, so maybe it's about losing at most 30 million EUR?
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Mattie
9 months ago
Okay, let me think this through. The question is asking about the interpretation of the 1-month, 95% VaR, which is 30 million EUR. I'm pretty confident that the correct answer is C, as VaR represents the maximum expected loss at a given confidence level.
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Shawnta
9 months ago
I think I've got this. The 95% VaR of 30 million EUR means that there is a 95% chance that Alpha Bank can lose more than 30 million EUR in the next month. So the correct answer is A.
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Carissa
9 months ago
Hmm, I'm a bit confused by this question. I know VaR is a risk measure, but I'm not entirely sure how to interpret the specific numbers given here. I'll need to review my notes on VaR to make sure I understand this properly.
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Myra
9 months ago
Okay, this looks straightforward. The question is asking about the interpretation of a 1-month, 95% VaR of 30 million EUR for Alpha Bank. I'll need to carefully read through the options and select the one that best matches the definition of VaR.
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