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Hello,
Ive seen in some questions where beta asset is used in CAPM formula to calculate ke and some questions use beta equity
So how do you know whether to use beta asset or beta equity in the CAPM formula?Beta equity gives the required return on shares, beta asset measures the risk of the business. (The two are the same if there is no gearing).
The most likely time we use the asset beta on its own is when we are calculating the APV, because we calculate the NPV as if all equity financed.
All of this is explained, with examples, in my free lectures.
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