Explanation:
This question is incomplete as the correct answer and explanation were not provided in the text. An extreme value event poses challenges primarily because extreme tail events are so rare that predicting them using traditional established loss distributions often fails, making standard modeling difficult.
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Q.3994 In FRM parlance, an extreme value is one that has a low probability of occurrence but potentially disastrous (catastrophic) effects. The main challenge posed by extreme values is that:
A
They do not conform to any of the established loss distributions
B
They can only be fully characterized by multiple loss distributions
C
They are too big such that the resulting loss estimates are infinitely large