Bug, feature request, or proposal:

Bug

What is the expected behavior?

Should not cause an exception

What is the current behavior?

Causes an exception:
Cannot read property 'disabled' of undefined in the following function:

ListKeyManager.prototype._setActiveInWrapMode = function (delta, items) {
    // when active item would leave menu, wrap to beginning or end
    this._activeItemIndex =
        (this._activeItemIndex + delta + items.length) % items.length;
    // skip all disabled menu items recursively until an enabled one is reached
    if (items[this._activeItemIndex].disabled) {
        this._setActiveInWrapMode(delta, items);
    }
    else {
        this.setActiveItem(this._activeItemIndex);
    }
};

What are the steps to reproduce?

Providing a Plunker (or similar) is the best way to get the team to see your issue.
Plunker template: http://plnkr.co/edit/o077B6uEiiIgkC0S06dd

https://material.angular.io/components/component/menu
focus on a menu item then use an arrow key

What is the use-case or motivation for changing an existing behavior?

Need to implement keyboard navigation to go through a menu

Which versions of Angular, Material, OS, browsers are affected?

Angular 2.4.5
Material 2.0.0-beta.2
Windows 10

Chrome Version 56.0.2924.87 (64-bit)
Microsoft Edge 38.14393.0.0
Microsoft EdgeHTML 14.14393

Is there anything else we should know?