The Capital Asset Pricing Model Example 11

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  1. Avatar of babarali47 babarali47 says:
    April 27, 2013 at 9:45 am

    Once again, Great lecture!….but, what is that alternative?

  2. Avatar of yenuar yenuar says:
    March 11, 2013 at 2:40 am

    I’m not sure about one thing…In Example 11 the asset beta equals to 1.57, equity beta is 1.80. What about the difference of 0.23? What does it represent if we assume that debt beta is 0?

    • Avatar of johnmoffat johnmoffat says:
      March 11, 2013 at 9:08 am

      Gearing makes the shares more risky and therefore the equity (share) beta is greater than the asset beta (which is the risk if there was no gearing). The fact that we assume the debt beta to be zero is irrelevant in that more gearing will always make a share more risky.
      There is no special significance attaching to the difference of 0.23.

  3. Avatar of bunnywong1986 bunnywong1986 says:
    May 23, 2012 at 10:55 am

    the lecture is great but i wonder why we don’t consider tax effect on culculating wacc? why not culculate wacc as:[ve/(ve+vd)]*ke+[ve/(ve+vd)]*0.75*6%?

  4. Avatar of asadxsiddiqui asadxsiddiqui says:
    May 22, 2012 at 8:31 pm

    Awesome explanation !!

  5. Avatar of nuan nuan says:
    March 20, 2012 at 2:48 pm

    HELP! I can’t see the rest of the ecture. It stops at around 21mins, after (Ke) for part b of the question

  6. Avatar of mwachilale mwachilale says:
    September 27, 2011 at 8:02 pm

    This lecture has clarified most of the errors that I was making on this topic.

    Thank you. I hope I will not repeat the same mistakes during exams.

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