Answer: $5.590 million

## Explanation To convert VaR from one time horizon to another under normal conditions, we use the square root of time rule: \[\text{VaR}_{\text{new}} = \text{VaR}_{\text{original}} \times \sqrt{\frac{\text{new horizon}}{\text{original horizon}}}\] Given: - Original VaR = $2.5 million - Original horizon = 2 days - New horizon = 10 days \[\text{VaR}_{10\text{-day}} = 2.5 \times \sqrt{\frac{10}{2}} = 2.5 \times \sqrt{5} = 2.5 \times 2.236 = 5.59\text{ million}\] Therefore, the appropriate translation of the two-day VaR to a ten-day horizon is **$5.590 million**. **Note:** This calculation assumes normal market conditions and that returns are normally distributed and independent over time.

Author: LeetQuiz .