This excerpt taken from the MCY 10-Q filed May 8, 2009.
Equity price risk
Equity price risk is the risk that the Company will incur losses due to adverse changes in the general levels of the equity markets.
At March 31, 2009, the Companys primary objective for common equity investments is current income. The fair value of the equity investment consists of $216.9 million in common stocks and $9.0 million in non-redeemable preferred stocks. The common stock equity assets are typically valued for future economic prospects as perceived by the market. The current market expectation is cautiously optimistic following government programs designed to sustain the economy. The Company has also allocated more to the energy and utilities sector relative to the S&P 500 Index to hedge against potential inflationary pressures on the equity markets possible in a sudden economic recovery.
The common equity portfolio represents approximately 7.5% of total investments at fair value. Beta is a measure of a securitys systematic (non-diversifiable) risk, which is the percentage change in an individual securitys return for a 1% change in the return of the market. The weighted-average Beta for the Companys common stock holdings was 1.11 at March 31, 2009. Based on a hypothetical 25% or 50% reduction in the overall value of the stock market, the fair value of the common stock portfolio would decrease by approximately $60 million or $120 million, respectively.