Luxury assets
A)have wealth elasticities of less than 1.
B)generally have low fixed costs of ownership.
C)generally have high transactions costs of acquisition.
D)have returns that are taxed at a higher rate than the returns on necessity assets.

Question

Quizplus · Accepted Answer

Luxury assets generally have high transactions costs of acquisition, meaning the cost to purchase and/or transfer ownership of these assets are generally high. This is due to factors such as rarity, exclusivity, and specialized expertise required to properly evaluate and authenticate these assets. Option A is incorrect since luxury assets can have wealth elasticities greater than 1. Option B is incorrect since luxury assets often have high fixed costs of ownership, such as maintenance, insurance, and storage. Option D is incorrect since the tax rate on returns for luxury assets can vary based on asset type and other factors.

Luxury Assets