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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.A) highB) infiniteC) negativeD) low

Sagot :

These stocks tend to have low betas.

What does low beta means in stock market?

If a security's beta value is less than 1.0, it is thought that it is theoretically less volatile than the market. A portfolio that includes this stock is less hazardous than one that does not. Utility stocks, for example, usually have low betas because they move more slowly than market averages.

If a stock's beta value is 1, the price movement of that stock is very market-dependent. Investing in equities with betas of 1 carries a systemic risk. But no illogical risk can be found using the beta calculation. A portfolio can include a stock with a beta of 1.0 without raising risk or the likelihood that the portfolio would provide excess return.

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