Question

Companies that sell household products and food have very little relation to the state of the entire economy because these basic needs always exist. These stocks tend to have ________ betas.

Answer 1

Answer:

Low betas.

Explanation:

Low beta stocks are considered to be less risky, and usually they also offer low returns. The risk of losing capital in this type of investment is very low. This type of investment is ideal for people that are risk adverse and prefer to maintain their capital even at low returns.

On the other hand the higher the beta the higher the risk, and it also comes with higher returns on investment.

Because the needs for household goods and food are always constant, the companies that supply them tend to have stock that are low beta.