SIE Exam Question 221: Answer and Explanation

Question: 221

What is the type of company whose earnings are easily affected and impacted by whatever the state of the overall economy is?

  • A. Defensive
  • B. Growth
  • C. Cyclical
  • D. None of the above

Correct Answer: C

Explanation:

A cyclical company is sensitive to the current state of the overall economy and reflects whatever that may be during periods of both high and low performance. A company in a defensive industry is the least sensitive to the state of the overall economy. A company in a growth industry will see faster growth than whatever the current state of the overall economy is.

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