An Asset in the Australian Market Has a Consumption Beta $45 \%$

question 18

Multiple Choice

An asset in the Australian market has a consumption beta of 3.0.If the variance of the asset is 20% and the variance of the growth rate in consumption is 12.5%,what is the asset's covariance with the growth rate in consumption?

• A) \( 45 \% \)
• B) \( 37.5 \% \)
• C) \( 15 \% \)
• D) \( 60 \% \)

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Definitions:

Asset Improvements

Expenditures made to increase the usefulness or value of a fixed asset.

Ordinary Maintenance

Routine and regular upkeep activities required to maintain or preserve assets in their original condition, preventing deterioration over time.

Asset Improvements

Asset improvements involve the enhancement or upgrade of an asset, increasing its value or extending its useful life, without necessarily changing its original purpose.

Ordinary Maintenance

Routine upkeep and repairs necessary to keep an asset operating under normal conditions.