Credit Corp (CCP) is an Australian receivables management company which provides debt purchase and debt collection services, primarily focusing on the acquisition of purchased debt ledgers (PDLs) comprised of distressed consumer debt from Australian and New Zealand banks, finance companies, and telecommunication companies. Using the last 5 years of monthly data, CCP is reported to have a beta of 0.61 compared to the ASX200. The annual risk-free interest rate is 1.5% and the expected rate of return on the market is 10% p.a. CCP had a closing price today of $17.05. It will pay a dividend of $0.75 at the end of the year.

Do you think CCP belongs to a defensive or cyclical sector? Why? (2 marks)