sir is it possible for a project of a geared company to have a higher asset beta then equity beta, or equity beta will always be higher than asset beta since it includes both the risk?
also if a company is all equity financed its asset beta is the business risk which is the systematic risk right?
correct me if I am wrong.
just watched all your lectures on this topic and things are very clear now. thank you for the lectures, sir.
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asset beta and equity beta
7y ago#1The equity beta must be higher than the asset beta because it includes the gearing effect (unless of course there is no gearing, in which case the equity beta is the same as the asset beta).
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