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In the context of managing a portfolio with a vast number of positions, which approach is the most effective for simplifying the computation of Value at Risk (VaR) by associating these numerous positions with a reduced set of core risk factors?
A
USD/EUR forward contracts are mapped to the USD/EUR spot exchange rate.
B
Each position in a corporate bond portfolio is mapped to the bond with the closest maturity among a set of government bonds.
C
Zero-coupon government bonds are mapped to government bonds paying regular coupons.
D
A position in the stock market index is mapped to a position in a stock within that index.
