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Sir what is total risk? Is it Systematic + unsystematic?
2)Is the gearing risk included into Total risk?
Because Equity beta measures systematic risk assuming unsystematic has been worn out by Portfolio + containing in itself Gearing risk of as well.
Please check my logic about it as well.
The total risk of a share is systematic risk plus unsystematic risk.
Gearing increases the existing risk – it is not like simply adding on extra risk. More gearing multiplies the existing risk. If you watch my lectures on capital structure I show how gearing increases the risk.
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