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1) bpp revision kit 32q coedon co ,I didn’t understand how equity beta has been found out .I didn’t get their assumption and in what proportion it is taken (MVe &MVd )
Can it be worked out without stated assumption ?2) May I know in which all scenarios we multiply asset beta in proportion to apply in equity beta formula .Done 3 questions ,found it confusing .Sometimes asset beta is straightly applied sometimes its calculated &combined in proportion then equity beta is found out
1) I am not sure I understand your problem. We need the growth rate in order to calculate the market value of equity (and hence the gearing ratio) and using the rb growth formula on the formula sheet is normal.
2) I assume you are referring to the fact that two streams are combined, with differing betas. You will know from the free lectures that in this case the total beta is the weighted average of the individual betas, weighted by the total market values of each stream.
1) part where they have calculated asset beta for hotel service
i didnt understand this —-> 0.61=asset beta hotel service *0.6 + (0.4*0.4)
where they got proportion of 0.6 and 0.4?
0.61 is the beta asset we have found out
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