Beta is a measure of a stock's volatility compared to the overall market. Stocks with lower betas tend to experience smaller price fluctuations relative to the market.

Utilities: Utility companies generally have stable and predictable revenue streams because they provide essential services like electricity, water, and gas, which are always in demand regardless of economic cycles. As a result, utility stocks have lower betas, reflecting their lower sensitivity to market movements.

Why Other Options Are Incorrect:

A . Transportation: Stocks in this sector are more sensitive to economic changes and fuel prices, leading to higher betas.

B . Capital Goods: This sector involves investments in industrial equipment and machinery, which fluctuate with economic cycles and have higher betas.

D . Automobiles and Components: This industry is cyclical and highly dependent on economic trends, leading to higher betas.

CSC Volume 2, Chapter 13: Risk and return in specific industries.