Sir could u please explain if the question says equity beta of x so does that mean geared b or ungeared b and why. Thanks
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Equity beta
11y ago#1The equity beta is the beta of a share and is always the geared beta.
The ungeared beta (or asset beta) measures the riskiness of the actual business - some types of business are more risky than others.
If there is gearing in a company then this makes the shares even more risky and therefore the equity beta (which measures the riskiness of the share) will be higher.
You will find it useful to watch the free lectures on CAPM where all of this is explained in details with examples.
Thank u sir
11y ago#3You are welcome :-)
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