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:

Competencies

The combination of skills, knowledge, and behaviors that are needed to perform a role or task effectively.

Skill-based Pay

A compensation strategy that rewards employees for the skills and knowledge they possess, rather than for their job title or position.

Organization Performance-based

Refers to the concept of evaluating and managing the performance of an organization based on specific outcomes and results rather than solely on processes.

Profit Sharing

A company policy of distributing a portion of its net profits to its employees.