it's more like a paper
VALUE AT RISK (VAR)
What is the most I can lose on this investment? This is a question that almost
every investor who has invested or is considering investing in a risky asset asks at some
point in time. Value at Risk tries to provide an answer, at least within a reasonable bound.
In fact, it is misleading to consider Value at Risk, or VaR as it is widely known, to be an
alternative to risk adjusted value and probabilistic approaches. After all, it borrows
liberally from both. However, the wide use of VaR as a tool for risk assessment,
especially in financial service firms, and the extensive literature that has developed
around it, push us to dedicate this chapter to its examination.