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Do we use beta of asset or beta of equity for CAPM
In future, if you want me to answer then you must ask in the Ask the Tutor Forum – this forum is for students to help each other.
Which beta we use depends on what it is we are trying to do!
If we are trying to find the cost of equity then we use the equity beta. However, it is so often necessary (because of, for instance, changes of gearing) to ungear the equity beta to find the asset beta, and then to regear the asset beta to get the new equity beta.
For a full explanation of all of this, you need to watch our free lectures on CAPM.