A cyclical stock's rate of return is not expected to decline during an overall market decline.

Question

Quizplus · Accepted Answer

Cyclical stocks are those that are closely tied to the overall economy and tend to perform well during economic expansions and poorly during economic contractions. During an overall market decline, cyclical stocks are likely to decline as people spend less money and businesses slow down. Therefore, their rate of return is expected to decline during an overall market decline.

A Cyclical Stock's Rate of Return Is Not Expected to Decline