Sensitivity, Volatility and Value-at-Risk Interpretation

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Sensitivity, Volatility and Value-at-Risk Interpretation - Article

This article explains how sensitivity, volatility and Value-at-Risk (VaR) help banks interpret market-risk exposure. It shows how changes in market factors affect portfolio values, how volatility influences uncertainty, and how VaR converts these risks into an understandable loss estimate. The focus is on simple interpretation, practical treasury application and common CAIIB exam traps.

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