Hi sir,
I have doubt in this question that why u used beta asset of y company instead of beta asset of x company. I am little confused here what I did is I calculate beta asset of x co and than y co .
How I know which company beta asset I have to used? Can you please explain me the reason. I am bit confused in this part. Thank you in advance. Have a great day ahead.
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Chapter 21 ( open tuition notes) example 2
5y ago#1The asset beta measure the risk of the business (without any gearing).
Given that they new operation is building ships, we need to know the asset beta for shipbuilding. To find it we find another company who is in the business of building ships and their asset beta will be the measure of risk for shipbuilding.
I hope that you are not using the notes without watching the lectures because that would be a waste of time. They are lecture notes and it is in the lectures that I work through the examples and explain and expand on the notes.
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