15. Which of the following best describes the correlation coefficients between s

Question

15. Which of the following best describes the correlation coefficients between stocks in the U.S. stock market? a. +1 b. Between 0 and 1 c. 0 d. Between -1 and 0 e. 16. In national recession not all industries and companies suffer equally. Can youl ?? think of some industries or products that are somewhat recession proof? Is this an example of unique or market risk? 17. From the following pairs of stock returns, identify which one is a. Perfectly positively correlated b. Not perfectly positively correlated c. Not perfectly negatively correlated d. Perfectly negatively correlated

Explanation / Answer

There are few industries which are recession proof. These are as follows:

1. Consumer Staples: product from this industry are recession proof because people will keep buying these products even during recession.

2. Grocery Store and Discount Retailer: people will buy consumer staples from these stores during recession as well, so this industry is also recession proof.

3. Some very niche industry or professional services firms like auditing firms.

It is an example of unique risk, since it is specific to company.

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