- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
Viewing 4 posts - 1 through 4 (of 4 total)
- Posts
is there any formula if VAR is like 5 year, 4 year ,8 year or any no of year .i didn,”t get 5^0.5 in the answer of BPP kit. thanks
We can’t add standard deviations, but we can add the variances (which is the standard deviation squared).
The examiners answer to Tisa is set out badly.
The SD for 1 year is 800,000, so the variance for 1 year is 800,000^2
Therefore the variance for 5 years is 5 x 800,000^2
Therefore the SD for 5 years is the square root of (5 x 800,000^2) = 800,000 x sq rt of 5 = 1788854
Multiply by 2.33 and you get 4168031 (as per the answer).In general terms, the SD for n years = std deviation for 1 year x (sq root of n)
My free lecture on VAR will help you:
https://opentuition.com/acca/p4/acca-p4-value-at-risk/
Viewing 4 posts - 1 through 4 (of 4 total)
- You must be logged in to reply to this topic.