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TRAMONT Co (Pilot 2012) – Q1: Asset Beta (Ba) vs Equity Beta (Be)

Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › TRAMONT Co (Pilot 2012) – Q1: Asset Beta (Ba) vs Equity Beta (Be)

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 13, 2017 at 6:35 pm #386106
    accalegend
    Member
    • Topics: 10
    • Replies: 21
    • ☆

    Hi John,

    Q1 of pilot paper states:

    “Tramont Co’s quoted beta is 1.17…………it is estimated that the beta applicable to the project if it is all-equity financed will be 0.4 more than the current all-equity financed beta of Tramont Co”.

    The resolution considers that 1.17 is equity beta and that beta applicable for the project is asset beta. My thought was exactly the other way around.

    Could you please explain how 1.17 is not asset beta and beta applicable for the project is not equity beta in this question.

    May 13, 2017 at 9:50 pm #386141
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    I am away from home until Tuesday lunchtime and I don’t have access to the question.
    Please ask again on Tuesday and then I will help you.

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  • The topic ‘TRAMONT Co (Pilot 2012) – Q1: Asset Beta (Ba) vs Equity Beta (Be)’ is closed to new replies.

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