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Describe some advantages and disadvantages of Value at Risk (VaR) as a risk measure relative to...

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Advance Math

Describe some advantages and disadvantages of Value at Risk(VaR) as a risk measure relative to other risk measures

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Value At Risk is a widely used risk management tool popular especially with banks and big financial institutions There are valid reasons for its popularity But for using Value At Risk for effective risk management without unwillingly encouraging a future financial disaster it is crucial to know the limitations of Value At Risk VAR does not measure worst case loss 99 percent VAR really means that in 1 of cases that would be 23 trading days in a year with daily VAR the loss is expected to be greater than the VAR amount Value At Risk does not say anything about the size of losses within this 1 of trading    See Answer
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