$2Suppose an FI hold a $2 000 000 trading portfolio with an average beta of 1.0. Over the last year, the daily return on the stock market index was 3%. How much does the FI stands to lose in earnings if adverse stock market returns materialize tomorrow?

A. $2000000 x 0.03 = 60000

B. $2000000 x 1.0 x 0.03 = 60000

C. $2000000 x 1.65 x 0.03 = 99000

D. $2000000 x 2.33 x 0.03 = 139800