Question

Companies that sell household products and food have very little relation to the state of the economy because such basic needs do not go away. These stocks tend to have ________ betas

Answer 1

B) Low

Explanation:Beta is a measure of the level of volatility of an investment portfolio, it can be used to describe the risks associated with the production of a particular product putting into consideration the various factors that changes the outlook of the economy.

Beta is usually expressed as below or above one depending on how the volatility of the product correlates with the volatility of the economy.

FOR HOUSEHOLD GOODS WITH VERY LITTLE RELATION TO THE STATE OF THE ECONOMY, THEY WILL HAVE LOW BETAS(WHICH MEANS THEIR VOLATILITY DOES NIT ALIGN WITH THE MARKET OR THE STATE OF THE ECONOMY)