SIE Exam Question 396: Answer and Explanation

Question: 396

Though there are numerous business sectors in the US economy, companies generally fall into three distinct categories:

• A. large cap; mid-cap; small-cap
• B. passive; active; tactical
• C. cyclical; defensive; growth
• D. conservative; moderate; speculative

Correct Answer: C

Explanation:

C: Cyclical companies tend to follow the business cycle: defensive companies tend to perform in a consistent stable way regardless of the cycle; growth companies are expected to grow faster than the economy in general.