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VAR

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › VAR

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • January 26, 2024 at 6:47 am #699097
    guyver101
    Participant
    • Topics: 33
    • Replies: 27
    • ☆☆

    Is it true that VAR works in the opposite direction, given that its a statistical estimate based on normal distribution?

    eg if NPV = 1000, and 95% VAR = 800 we say we are 95% confident that the minimum NPV is 200

    Can we also say we are 95% confident that the maximum NPV will be (1000+800) = 1800?

    Thanks

    January 26, 2024 at 8:45 am #699101
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54759
    • ☆☆☆☆☆

    We can, but this is not the point of looking at the VAR because we are concerned about the risk of things being worse.

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