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Basic Question 6 of 11
Which of the following industries is likely to have a low beta?
B. The construction industry
C. The steel industry
D. The utilities industry
A. The auto industry
B. The construction industry
C. The steel industry
D. The utilities industry
User Contributed Comments 13
| User | Comment |
|---|---|
| Rajain | Why |
| leoo | lowest risk, usually, |
| KD101 | saturated market, steady demand, |
| Will1868 | The auto, construction, and steel industries are very cyclical, while utilites are a necessary good for nearly all consumers in an economy (eg there is always a demand for the consumption of energy)therefore the utilities industry is relatively more stable and less volatile than other sectors of the ecomony/market giving it a lower beta. |
| haarlemmer | You got to pay any bill sent by utilities companies, otherwise, man you are in trouble. and it is a big one whereas the rest are just fine. |
| SueLiu | Would this apply in foreign markets as well as the domestic (US) one? |
| Done | You forgot to mentioned that utilities are somewhat heavily regulated. |
| surob | Utilities are usually natural monopolies, which makes them less volatile to the market risk |
| chris12345 | without utilities we wouldnt be able to cook our food, eat, drink, have sexytime or even use any utilities!!! |
| gulfa99 | when an economy enters into recession phase, all sectors decline..biggest impact on steel, construction, auto etc..as there is less demand ...whereas utility is a necessity even in a recessionary environment. |
| tomalot | Hey yo Chris, you can't bump uglies with the lights off?! Whassup with that? |
| khalifa92 | guys chill all other industries have high competition whilst utility has lowest, my understanding. |
| sshetty2 | rofl @ tomalot's comment , srsly chris, what kind of utilities are you using for sexytimes?? |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
calculate and interpret beta
CFA® 2024 Level I Curriculum, Volume 2, Module 2.