Which One of the Following Statements Best Explains the Fact

question 2

Multiple Choice

Which one of the following statements best explains the fact that cyclical firms tend to have high betas?

• A) Their earnings are particularly sensitive to the state of the economy.
• B) Their stocks are overpriced.
• C) Their earnings are less diversifiable.
• D) Their profit margins are small.

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Definitions:

Pretranscriptional Control

Regulatory mechanisms that act before the transcription process in gene expression to modulate the efficiency and rate at which genes are transcribed.

Methylation

A biochemical process that involves the addition of a methyl group to molecules like DNA, affecting their function and activity.

Chromatin Packing

The process of winding DNA around histone proteins to compact it into structural units known as nucleosomes, which further fold to form chromosomes.

Proto-oncogene

A normal gene that can become an oncogene due to mutations or increased expression, potentially leading to cancer.