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2012 june q4

This topic has 1 reply, 2 voices, and was last updated 10 years ago by John Moffat.

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October 26, 2014 at 4:18 pm #206098
jess
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1.217=component asset beta x 0.25 + 1.078 x 0.75
the weighting is based on market value of different part of operation. The market value should be equity+debt or equity only?
October 27, 2014 at 5:09 pm #206244
John Moffat
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Strictly it should be on the equity market values if there was no debt in the company. However to calculate this gets very messy and in the exam use the equity market values as they are (the question says that 75% of the equity is in one and 25% in the other).
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