A portfolio manager has estimated the daily Value-at-Risk (VaR) at a 99% confidence level for a client's portfolio as $15,000. This implies that over the next day, there is a:

Question: A portfolio manager has estimated the daily Value-at-Risk (VaR) at a 99% confidence level for a client's portfolio as $15,000. This implies that over the next day, there is a:

Answer options: ✅ 1% chance that the portfolio will lose more than $15,000.

• 99% chance that the portfolio will lose more than $15,000.
• 1% chance that the portfolio will gain more than $15,000.
• 99% chance that the portfolio will lose exactly $15,000.

Correct answer: 1% chance that the portfolio will lose more than $15,000.

Explanation: Value-at-Risk (VaR) quantifies the potential loss of an investment over a defined period for a given confidence level. A 99% VaR of $15,000 means there is a 1% probability that the portfolio's loss will exceed $15,000 over the specified timeframe.