You are given the following information about a portfolio you are to manage. For the long term, you are bullish, but you think the market may fall over the next month. $\begin{array}{lc}
\text { Portfolio Value} &\$ \quad \text { 1million } \
\text { Portfolio's Beta} &0.86\
\text { Current S\&P500 value } &990\
\text {Anticipated S\&P500 Value } &915\
\end{array}$

What is the dollar value of your expected loss?
A) $142,900
B) $65,152
C) $85,700
D) $30,000
E) $64,200

Question

You are given the following information about a portfolio you are to manage. For the long term, you are bullish, but you think the market may fall over the next month. $\begin{array}{lc}
  \text {  Portfolio Value} &\$ \quad \text { 1million } \
 \text {  Portfolio's Beta} &0.86\
 \text { Current S\&P500 value } &990\
 \text {Anticipated S\&P500 Value  } &915\
\end{array}$

What is the dollar value of your expected loss?
A) $142,900
B) $65,152
C) $85,700
D) $30,000
E) $64,200

Quizplus · Accepted Answer

The expected loss can be calculated using the formula: Expected Loss = Portfolio Value * Portfolio's Beta * (Anticipated S&P500 Value - Current S&P500 Value) / Current S&P500 Value. Plugging in the numbers: Expected Loss = $1,000,000 * 0.86 * (915 - 990) / 990 = $65,152.

You Are Given the Following Information About a Portfolio You