The Component VaR (CVaR) measures how much a specific asset contributes to the total VaR of a portfolio. It can be calculated as the Marginal VaR (MVaR) multiplied by the asset's dollar weight, or by using the formula: $CVaR_i = VaR_p \times w_i \times \beta_i$

Step 1: Calculate the Portfolio VaR ($VaR_p$) Assuming a standard normal z-value of $2.33$ for a 99% confidence level, the Portfolio VaR is: $VaR_p = V_p \times \sigma_p \times Z = 200 \times 0.27 \times 2.33 = 125.82 \text{ million}$

Step 2: Calculate the Beta of Alphabet stock with respect to the portfolio ($\beta_i$) $\beta_i = \frac{\text{Cov}(R_i, R_p)}{\text{Var}(R_p)} = \frac{\rho \times \sigma_i \times \sigma_p}{\sigma_p^2} = \frac{\rho \times \sigma_i}{\sigma_p}$ $\beta_i = \frac{0.54 \times 0.22}{0.27} = 0.44$

Step 3: Calculate the weight of Alphabet stock in the portfolio ($w_i$) $w_i = \frac{18}{200} = 0.09$

Step 4: Calculate the Component VaR of Alphabet stock $CVaR_i = 125.82 \text{ million} \times 0.09 \times 0.44 = 4.98247 \text{ million}$

Rounding to three decimal places, the Component VaR is USD 4.982 million.