CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Which of the following industries is likely to have a low beta?

A. The auto industry
B. The construction industry
C. The steel industry
D. The utilities industry
Correct Answer: D

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??
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