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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Beta equity of an unlisted company
i think its a pretty silly question, but somehow am unable to connect the dots. here it is:
Sir why is it difficult to calculate with certainty the Beta equity of an unlisted company?
Because its shares don’t trade, so predicting the market value gets tough, and thus the beta equity of an unlisted entity gets hard to predict?
As I explain in my lectures, betas in practice are calculated by comparing the movements of the share price with the movements in the market over a period of time.
Given that shares in unlisted companies do not have a market value on the stock exchange it is not possible to calculate the beta in that way.