Answer: Low betas and high risk premiums.

## Explanation Assets that perform well during periods of low market returns are considered **defensive assets** or **hedging assets**. These assets have: - **Low betas**: Beta measures an asset's sensitivity to market movements. A low beta (typically <1) means the asset is less volatile than the overall market and tends to perform better when markets decline. - **High risk premiums**: These assets command higher risk premiums because they provide valuable insurance-like protection during "bad times" (market downturns). Investors are willing to pay a premium for assets that perform well when their overall portfolio is suffering. This relationship is consistent with the **consumption-based asset pricing model**, where assets that pay off well during economic downturns (when marginal utility is high) are particularly valuable to investors, leading to lower expected returns (or higher prices) for the same level of risk.

Author: LeetQuiz .