You Are Given the Following Information About a Portfolio You

question 41

Multiple Choice

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. $$\begin{array} { l c } \text { Portfolio Value } & \$ 1 \text { milion } \\\text { Portfolio's Beta } & 0.60 \\\text { Current S\&P500 Value } & 1400 \\\text { Anticipated SEP500 Value } & 1200 \\\end{array}$$ If the anticipated market value materializes, what will be your expected loss on the portfolio?

• A) 14.29%
• B) 16.67%
• C) 15.43%
• D) 8.57%
• E) 6.42%

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Definitions:

Anxiety

A feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.

Empirically Tested

Evaluated or tested based on observations or experience rather than theory or pure logic.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Principle of Falsifiability

A criterion for scientific theories, asserting that for a theory to be considered scientific, it must be testable and potentially refutable.