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Extreme value theory (EVT) states that:
A. the exponential distribution is an appropriate method for modeling operational loss severity for a heavy-tailed distribution.
B. the exponential distribution is an appropriate method for modeling operational loss severity for a thin-tailed distribution.
C. the lognormal distribution is an appropriate method for modeling operational loss severity for a thin-tailed distribution.
D. the lognormal distribution is an appropriate method for modeling operational loss severity for a heavy-tailed distribution.
Answer:B
EVT states that the exponential distribution is an appropriate method for modeling operational loss severity for a thin-tailed distribution.
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