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Finance and Accounting : Financial Modeling - Essay Example
Finance & Accounting
Pages 16 (4016 words)
Financial Modeling Summary: The chapter below is the discussion of the financial modeling, the financial model discussed in the chapter mainly consists of the various approaches used in the modeling. The different kind of the modeling discussed here are the value at risk, Mont Carlo VaR analysis, bootstrap method of analysis and the portfolio analysis…
We begin the chapter with the general idea of the VaR and the various approaches to the VaR, the historic application and the application of the same. We also include the evaluation of the VaR at the different possible approaches in the study; a final conclusion is made by the calculations carried out in the study. Introduction: The ‘value at risk’ is an extensively employed risk measure concept in the risk of loss on a particular portfolio of fiscal assets. For a specified portfolio, probability and time horizon, VaR is described as a threshold price such that the possibility that the market loss on the portfolio above the particular time horizon go beyond this value is the known probability level. VaR has different important uses in finance risk management, risk assessment, financial control, reporting of the financial statement and calculating the capital regulation by analyzing the Various concepts. VaR can also be used in non-financial aspects. The VaR risk assessment defines risk as a market loss on a permanent portfolio over an unchanging time horizon, by analyzing the normal markets. There are many option risk procedures in finance. ...
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