Some Securities Are Considered to Be "Defensive" in That They

question 48

Essay

Some securities are considered to be "defensive" in that they tend to hold their value or increase in value when the majority of securities are losing value, such as during a recession. What could one conclude about the betas of defensive securities?

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Definitions:

Stagflation

An economic condition characterized by stagnant growth, high unemployment, and high inflation.

Potential Output

The maximum amount of goods and services an economy can produce when it utilizes all of its resources efficiently, without causing inflation.

Golden Age

A period of great happiness, prosperity, and achievement, often idealized in historical contexts or specific fields.

Fiscal Policy

The use of government spending and taxation to influence the economy, including policies aimed at reducing unemployment, controlling inflation, and fostering economic growth.