Value at Risk, or VaR, is a tool that helps investors, companies, and fund managers figure out how much money they might lose in the worst-case scenario.
As the global debt stock skyrockets without any foreseeable pause, this phenomenon has elicited attention among several stakeholders. However, governments continue to borrow to fulfill pressing needs domestically and externally, further driving their national debt burdens to alarming heights.
But how do we make this analysis? Some investors rely on guesswork, while others examine past performance. But hold on! There s a logical model that can help you calculate the expected rate of return based on the risk involved. This model is known as the ‘Capital Asset Pricing Model.
A lack of understanding about risk of the financial product in proportion to the risk-taking capacity, results in an investor losing hard-earned money.