CAPM and MM Combined (part c)

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  1. Avatar of hasanali95 hasanali95 says:
    April 7, 2013 at 10:13 pm

    Hi sir :) when do we ungear and re gear instead of just using the ungeared beta in CAPM formula?

  2. Avatar of papiasu papiasu says:
    June 10, 2012 at 4:47 pm

    Thank you sir, you are simply the best

  3. Avatar of johnmoffat johnmoffat says:
    May 5, 2012 at 11:01 am

    Yes – if you are asked for the cost of equity then this is correct.

    The cost of equity is always determined from the geared (equity) beta.

    (although obviously if the company is all equity financed, or if the project is to be financed all from equity, then the geared beta will be the same as the ungeared (asset) beta. (

  4. Avatar of icriosphinx icriosphinx says:
    May 4, 2012 at 7:05 pm

    In the bpp study text. They un-gear the beta and re-gear it according to current company and then use it in the formula to get cost of equity…

  5. Avatar of superacca superacca says:
    April 14, 2012 at 1:10 pm

    Thank you for the explanation on the Discount rate to use for the exam question

  6. Avatar of funlover funlover says:
    November 30, 2011 at 1:35 pm

    This is surely a class act!

    My only wish is to have a lecturer like you when I do P4.

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