Question

Using a value at risk (VaR) model based on historical data to forecast future expected losses works well:_______

a. all the time.
b. during times of normal market conditions.
c. during times of increased market volatility.

Answer 1

b. during times of normal market conditions.

Step-by-step explanation:

Using a value at risk (VaR) model based on historical data to forecast future expected losses works well: "during times of normal market conditions."

The above statement is true because VaR regardless of the models does not measure the drastic or uncertain situation. Also given that it is used based on historical data, then it is believed to work better on the assumption of normal circumstances.