Calculate the Consumption Beta for an Asset with a Variance $0.15$

question 39

Multiple Choice

Calculate the consumption beta for an asset with a variance of 10%,where the variance of consumption growth is 15% and the covariance between the growth rate in consumption and the asset is 20%.

• A) \( 0.15 \)
• B) \( 1.00 \)
• C) \( 1.25 \)
• D) \( 1.33 \)

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Definitions:

Paul Ekman

A psychologist who is best known for his work on the facial expressions of emotions and their universality across cultures.

Physiological Patterns

Regular and predictable ways in which the body functions or responds to stimuli, often related to health and disease.

Innate

Refers to qualities, abilities, or knowledge that are present from birth, not acquired through experience or learning.

Evolutionary Reason

An explanation for a trait, behavior, or phenomenon that is based on the principles of natural selection and adaptation.