Many of the Tools of Risk Management Can Be Developed $\Delta$

Multiple Choice

Many of the tools of risk management can be developed by focusing on computing a loss distribution.Denote the time t value of a firm's assets,liabilities,and equity by A_t,L_t,and E_t,respectively.If $\Delta$ denotes a change in these quantities,and x denotes a predetermined value,then the risk measurement problem may be set up as:

A) computing Prob { $\Delta$ E_t $\le$ x}where $\Delta$ E_t $\equiv$$\Delta$ A_t - $\Delta$ L_t
B) computing Prob { $\Delta$ E_t $\le$ x}where $\Delta$ E_t $\equiv$ $\Delta$ A_t + $\Delta$ L_t
C) computing Prob { $\Delta$ A_t $\le$ x}where $\Delta$ A_t $\equiv$ $\Delta$ E_t - $\Delta$ L_t
D) computing Prob { $\Delta$ L_t $\le$ x}where $\Delta$ L_t $\equiv$ $\Delta$ A_t - $\Delta$ E_t
E) None of these answers are correct.