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The trick in that question was that the vol figures were given ANNUALIZED and they were asking for the ONE DAY VaR, so you should scale both VaRs vols by the root of time. I think that's what they were really testing.
I spent about 20 min total on this question (came back once I was done exam), read and re-read about 10 times, looking for the annual to daily conversion language or 95% to 99% etc. It was not there.
Also, since this question has bugged me so much I worked it to a daily var and it still doesnt come to one of the answers, even if thats what they meant to do.
I chose C also.