VaR

Hi harri!

95% means 0.95, we must have arrived at 0.95 by adding "some value" to 0.5 (since d1 > 0). If we calculate that "value" by subtracting 0.5 from 0.95, we will have 0.45. Now just go to the Normal distribution table and see the corresponding value of 0.45, you'll get 1.65.

Hope john likes it ;)

Hi muhaimin,

Thanks for your response but if I look up 0.45 I get 0.1736?

I'm confused. Am I not using the table correctly?

Do I find 0.4505 and that is equal to 1.65?
I think so!

yes harri, closer to 0.45 is 0.4505 and 0.4495, so it can either be 1.65 or 1.64.

Since the examiner rounds it to the lower side so do we.

Thanks Muhaimin, you helped solve my headache!
Much appreciated

most welcome!

Good answer Muhalmin.
(Some of the exam/revision kits try to be clever and start approximating the tables, but there is no need to in the exam!)

Thanks john, I would be pleased to help the other students as well if i get the opportunity to do so.

I would appreciate if you see my post (a question from pilot paper) which is still unanswered. I know your answer would be "Time constraints! time constraints! ;)" ....

Dear Harripool! if you can help me out? :)
Thanks

at 90% confidence level, is the value from the table 1,29???

You should find 0.9-0.5=0.40 (cell), then you roughly get 1.285.

correct :)