Final answer:
The question requests the calculation of VaR and ES for a 1 million euro portfolio given FX volatilities and exchange rate, which cannot be done without additional information.
Step-by-step explanation:
The student's question revolves around calculating the Value at Risk (VaR) and Expected Shortfall (ES) of a trading portfolio consisting of 1 million euros, given certain foreign exchange (FX) volatilities and an exchange rate. However, due to incomplete information provided regarding the confidence level or the time horizon for VaR and ES calculations, it is not possible to directly compute these risk metrics without making a number of assumptions.Comparatively, Internal failure costs are incurred when defects are detected before products reach the customer, leading to scrap or rework, and External failure costs arise when customers find defects, resulting in returns, warranties, and potentially brand damage. Understanding these costs is crucial for businesses to manage quality effectively. An example of managing such costs can be seen in the efforts to reduce pollution, where businesses incur abatement costs. In 2005, the pollution abatement capital expenditures and operating costs in the US were nearly $27 billion.