Answer: VaR does not consider liquidity

## Explanation **VaR Limitations:** 1. **Does not consider liquidity risk** - VaR typically assumes that positions can be liquidated at current market prices, but in reality, large positions may be difficult to unwind without affecting prices. 2. **Reliability can be verified** - VaR models can be backtested against actual portfolio performance to verify their reliability, so Option B is incorrect. 3. **Can be used for performance evaluation** - VaR is commonly used in performance evaluation and risk-adjusted return measures, so Option C is incorrect. **Key limitation:** VaR's assumption of normal market conditions and inability to account for liquidity constraints during market stress is a well-known limitation.

Author: LeetQuiz Editorial Team