Hello,
First of all, thank you for your lectures! Great material and help.
In the first part of the lecture "The impact of financing" around minute 12:30, you've been explaining the alternative solution of example 1 from the notes (chapter 12). You have mentioned that instead of using M&M equation we could use the Beta formula. However, there is no market return which I could use to calculate the market premium and at the end get the Beta.
Is there any way around this issue?
Regards,
PJ
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Lectures - The impact of financing part 1 - Clarification - Example 1
7y ago
7y ago#1You can only do it that way using algebra and letting the market return be X. As you work through the equations you will find that X ends up disappearing :-)
However I really would not spend time doing it - it takes longer and there is more chance of making mistakes.
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