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Hi, I am doing example 3 in Chapter 16 The Valuation of Acquisitions and Mergers. For the equity beta using A’s gearing, why do we flip the formula? Thanks in advance, Andrea
The formula as it is written on the formula sheet gives the asset beta when we know the equity beta, so to calculate the equity beta when we know the asset beta we need to use the formula ‘backwards’.
Thanks John.
On a slightly different note, I was just wondering why there is no answer for Chapter 20 example 7 on interest rate collars at the back of the notes? I also can’t find a lecture on it. Am I missing something?
Thanks in advance,
AndreaThanks for pointing it out – I must add an answer to the notes.
I uploaded an article explaining interest rate collars some time ago – you can find it here:
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