Question

Which of the following is most likely to have a low (e.g. 0.2) beta?

A biotech company awaiting FDA approval

An index fund following the S&P 500

A high-end jewelry store

An insulin (diabetes drug) producer

Answer 1

A company will have a lowe beta of around 0.2 if it is not affected by the changes in the market. This is true for companies in the essential goods sector. A biotech company, index fund, and jewelry store will be affected by the market performance. An insulin producer will have a low beta considering that it will have a demand even if the economy falls or rises. Hence, the answer is-

An insulin (diabetes drug) producer

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