Use the following information to answer the question(s)below.
Consider the following information regarding corporate bonds:
-Which of the following is true of asset betas?
A)Asset betas are expected to vary greatly within firms in the same industry.
B)Businesses that are less sensitive to market and economic conditions tend to have higher asset betas than more cyclical industries.
C)Businesses that are less sensitive to market and economic conditions tend to have lower asset betas than more cyclical industries.
D)A and B are correct.

Question

Use the following information to answer the question(s)below.
Consider the following information regarding corporate bonds: 
-Which of the following is true of asset betas?
A)Asset betas are expected to vary greatly within firms in the same industry. 
B)Businesses that are less sensitive to market and economic conditions tend to have higher asset betas than more cyclical industries. 
C)Businesses that are less sensitive to market and economic conditions tend to have lower asset betas than more cyclical industries. 
D)A and B are correct.

Quizplus · Accepted Answer

Asset betas measure the sensitivity of a company's assets to market risks. Therefore, businesses that are less sensitive to market and economic conditions tend to have lower asset betas than more cyclical industries. Option A is incorrect because asset betas tend to be similarly high or low within firms in the same industry. Option B is also incorrect because higher asset betas are typically associated with more cyclical industries.

Use the Following Information to Answer the Question(s)below