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John Flag, the manager of a USD 150 mill...

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题目

John Flag, the manager of a USD 150 million distressed bond portfolio, conducts stress tests on the portfolio. The portfolio’s annualized return is 12%, with an annualized return volatility of 25%. In the last two years, the portfolio encountered several days when the daily value change of the portfolio was more than 3 standard deviations. If the portfolio suffered a 4-sigma daily event, which of the following is the best estimate of the change in the value of this portfolio? Assume that there are 250 trading days in a year.

选项

A.USD 9.48 million

B.USD 23.70 million

C.USD 37.50 million

D.USD 150 million

答案

A

解析

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A 4-sigma event therefore implies a loss equal to:4×0.0158×150=9.48 million.