Answer: a loss of more than $1.5 million over one week is expected 5% of the time.

## Explanation A 5% VaR (Value at Risk) of $1.5 million means that there is a 5% probability that the portfolio will experience a loss **greater than** $1.5 million over the specified time period (1 week). **Key points:** - VaR represents the **maximum** loss that will not be exceeded with a given confidence level - 5% VaR means 95% confidence level - The loss threshold is $1.5 million, and losses **exceeding** this amount occur with 5% probability - Option A is incorrect because VaR doesn't measure the probability of losing exactly $1.5 million - Option B is incorrect because $1.5 million is the **maximum** loss expected 95% of the time, not the minimum loss Therefore, option C correctly states that a loss of more than $1.5 million over one week is expected 5% of the time.

Author: LeetQuiz Editorial Team