Chapter 9 - Investment Management - 10%

Question 1

Quantifying risks - Forward-Looking

Answer 1

Forward-looking forecasts and probabilities assess the likelihood of each possible state of the world occurring and estimate the returns and values arising given that particular outcome.

Question 2

Quantifying risks - Backward-looking

Answer 2

analyses tend to study historically observed returns and associated frequencies on the assumption that this past data will be representative of the future.