What type of asset is described as having a negative beta?

What type of asset is described as having a negative beta?

• A. Real estate
• B. Gold
• C. Technology stocks
• D. High-yield bonds

Answer: (B)

An asset with a negative beta has a tendency to move inversely to the overall market. Gold is often viewed as a safe-haven asset that tends to perform well during times of economic uncertainty or market downturns. When stock markets face declines, investors typically flock to gold as a store of value, resulting in a decline in demand for riskier assets. This inverse relationship is what gives gold a negative beta, as its price may rise even when market conditions falter. In contrast, real estate generally has a positive or low beta because it tends to move in tandem with economic cycles. Technology stocks often exhibit a higher beta, reflecting their correlation with market movements and economic growth, while high-yield bonds can also move in line with the broader market but do not typically carry a negative beta. Thus, gold stands out as the asset that best represents having a negative beta due to its counter-cyclical behavior.

An asset with a negative beta has a tendency to move inversely to the overall market. Gold is often viewed as a safe-haven asset that tends to perform well during times of economic uncertainty or market downturns. When stock markets face declines, investors typically flock to gold as a store of value, resulting in a decline in demand for riskier assets. This inverse relationship is what gives gold a negative beta, as its price may rise even when market conditions falter.

In contrast, real estate generally has a positive or low beta because it tends to move in tandem with economic cycles. Technology stocks often exhibit a higher beta, reflecting their correlation with market movements and economic growth, while high-yield bonds can also move in line with the broader market but do not typically carry a negative beta. Thus, gold stands out as the asset that best represents having a negative beta due to its counter-cyclical behavior.