Companies that are exposed to the business cycle:
A) tend to have high market risk.
B) tend to have low market risk.
C) have negligible specific risk.
D) are safe investments.

Question

Quizplus · Accepted Answer

Companies that are exposed to the business cycle tend to have high market risk because their performance is heavily influenced by the overall economic conditions, such as changes in GDP, interest rates, and inflation. As a result, their stock prices are more sensitive to fluctuations in the market. Therefore, these companies are riskier investments.

Companies That Are Exposed to the Business Cycle