Value-at-Risk Theory and Practice

Chapter 1, Page 20
Exercise 1

Describe a measure and corresponding metric that might be used in weather forecasting.

 

 

Solution

Many answers are possible for this exercise. Consider the following:

A hollow glass cylinder is a meter long and has an internal diameter of a centimeter. It is open at one end, sealed at the other and graded with millimeter measurements. A bath of mercury is maintained at a temperature of . The cylinder is immersed in the bath, allowing it to fill with mercury. While keeping the open end immersed, the cylinder is held vertically, with the sealed end about 950 centimeters above the surface of the mercury. A column of mercury is suspended within the cylinder. Its height is measured in centimeters and is multiplied by 0.01316. The result is recorded. This procedure is a measure. We interpret the recorded number as air pressure measured in atmospheres. The interpretation is a metric.

 

website: http://www.contingencyanalysis.com
value-at-risk direct link: http://www.value-at-risk.net
copyright © Contingency Analysis, 2003