Which of the Following Is Less Sensitive to Interest Rate

question 72

Multiple Choice

Which of the following is less sensitive to interest rate changes?

• A)The residential housing market.
• B)Food and other household items.
• C)Utility industries.
• D)State and local finances.

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Definitions:

Beta

A statistic that measures the volatility of a stock or portfolio compared to the market as a whole, used in the CAPM to calculate cost of equity.

Systematic Risk

The type of risk inherent to the entire market or an entire market segment, which cannot be mitigated through diversification.

Correlated Changes

Refers to situations where two or more variables move in relation to each other.

Economy

The large set of inter-related production and consumption activities that aid in determining how scarce resources are allocated.