The role of value at risk in enterprise risk management
The Role of VaR in Enterprise Risk Management:
1. Please see below for the assignment parameters. Please visit the link below to gain a greater grasp of VaR and its application to risk. http://www.investopedia.com/articles/04/092904.asp?lgl＝rira-baseline-vertical Value at Risk – Methods
2. Next, use Yahoo Finance to gain Tesla’s (TSLA ticker symbol) monthly closing stock price for the most recent 5 years.
3. Using a VaR variance/covariance method, calculate the value at risk with the following parameters for Mr. Young inclusive of the following assumptions: Portfolio Value: $143,000 Average return: 8.6% Standard deviation: 10% Confidence level: 95%
4. Based upon the findings of your analysis, what findings of the data you have collected what are the indicators related to the risk and opportunities for an investment in the stock. Tesla VaR benchmarks and what do they mean? Copy graphs and VaR Calculation into the Word document. Explain the inferences of the graphs. What are the advantages and disadvantages of using VaR?
5. Further, please explain what you would advise Mr. Young to do in terms of his choice of Tesla’s investment for the company and what he should explain to the CEO as to possible risk impact on the company.
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