Beta of Debt

This topic has 5 replies, 2 voices, and was last updated 11 years ago by John Moffat.

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November 27, 2014 at 1:54 pm #213819
Dushyan
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Sir
I watched your lecture CAPM, MM combined
So, in exam we assume Debt is risk-free and so the beta of debt is zero
thus, the second part of formula become irrelevant (from what I’ve understood from the lecture)
clear me if I’m wrong sir 😉
November 27, 2014 at 3:21 pm #213854
John Moffat
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You are correct – the second part of the formula is always irrelevant in Paper F9.
November 28, 2014 at 9:26 am #214008
Dushyan
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Sir, in exam we assume the company is maintaining its current gearing?
November 28, 2014 at 12:10 pm #214072
John Moffat
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Unless you are told differently, then yes.
November 29, 2014 at 2:17 am #214211
Dushyan
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ok sir
thanks 😉
November 29, 2014 at 12:46 pm #214340
John Moffat
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You are welcome 🙂
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