Determine the probability associated with a value at risk

Reference no: EM131325369

Company CPN and dealer SwapFin are engaged in three transactions with each other. From SwapFin's perspective, the market values are as follows:

Explain the consequences to SwapFin if CPN defaults with and without closeout netting. Within your answer, explain what is meant by cherry picking.

Suppose you enter into a bet with someone in which you pay $5 up front and are allowed to throw a pair of dice.

You receive a payoff equal to the total in dollars of the numbers on the two dice. In other words, if you roll 1 and a 2, your payoff is $3 and your profit is $3 - $5 = -$2.

Determine the probability associated with a Value at Risk of $0.

Reference no: EM131325369

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