Final answer:
A gold mining company is likely to exhibit the least macro risk exposure compared to airline, construction, and auto manufacturing companies, as gold often retains value during economic downturns. Option number C is correct.
Step-by-step explanation:
The student has asked which firm is likely to exhibit the least macro risk exposure. Macro risk, or systematic risk, refers to the overall risk that affects the entire market or a segment of the market and is not specific to a single company or industry. Generally, companies that are less tied to the economic cycles and have more stable demand are likely to have less macro risk exposure.
Among the options given:
- Airline companies are highly susceptible to fluctuations in the economy, fuel prices, and government regulations, hence, they have high macro risk exposure.
- Construction companies are closely linked to the real estate market and economic cycles, so they too have significant macro risk exposure.
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- Auto manufacturers are dependent on economic conditions, consumer preferences, and international trade, which subjects them to considerable macro risk.
- Gold mining companies, however, may exhibit the least macro risk exposure. Gold is often seen as a safe-haven asset that can retain its value, or even appreciate, during times of economic uncertainty. Consequently, the demand for gold may remain relatively stable or increase during economic downturns.
Therefore, the correct answer is C) Gold mining company.