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 $

Question

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 $

Quizplus · Accepted Answer

Using equation 9.1,we can compute the beta as follows: 0.2/0.15 = 1.33.

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

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