Ch.10 · Risk Measures and Ratios · hard

What is 'Value at Risk' (VaR) in the context of mutual fund risk measurement?

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EXPLANATION

Value at Risk (VaR) is a statistical measure of the maximum potential loss on a portfolio over a specified time horizon at a given confidence level. For example, '1-day VaR of ₹10 lakh at 95% confidence' means there is a 95% probability that the portfolio will not lose more than ₹10 lakh in one day. SEBI uses VaR for liquid fund risk assessment.

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