JOURNAL OF ACCOUNTING AND FINANCE
Risk Measurement-Value at Risk (VaR) Versus Conditional Value at Risk (CVaR): A Teaching Note
Author(s): Cao Minh Duc, Alex Faseruk, Ashrafee Hossain
Citation: Cao Minh Duc, Alex Faseruk, Ashrafee Hossain, (2018) "Risk Measurement-Value at Risk (VaR) Versus Conditional Value at Risk (CVaR): A Teaching Note", Journal of Accounting and Finance, Vol. 18, ss. 6, pp. 86-93
Article Type: Research paper
Publisher: North American Business Press
Abstract:
Financial history has demonstrated that desirable and undesirable outcomes are always possible.
Participants in the industry have made substantial progress in quantifying and mitigating many sources
of risks. One more recent indicator is value at risk (VaR). However, this technique remains controversial, despite being an industry standard. Several studies have identified limitations with VaR. This teaching note compares it to conditional value at risk (CVaR) to demonstrate both the usefulness and limitations of these techniques and provide recommendations concerning which risk measurement method is more prudent under selected states of nature to aid professors in explaining the usefulness of VaR and CVaR.