CSI CSC2 Exam - Topic 6 Question 12 Discussion

Actual exam question for CSI's CSC2 exam

Question #: 12
Topic #: 6

[All CSC2 Questions]

What industry stocks tend to have lower betas than the market?

ATransportation

BCapital goods

CUtilities

DAutomobiles and components

Show Suggested Answer

Suggested Answer: C

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.

by Ruby at Mar 30, 2026, 11:59 AM

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Mable

4 days ago

I feel like transportation stocks might have higher betas due to economic cycles, but utilities seem like a safer bet.

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Artie

9 days ago

I remember studying that capital goods can be more volatile, so maybe they don't fit this question.

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Adrianna

14 days ago

I think utilities usually have lower betas because they provide essential services, but I'm not entirely sure.

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