20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March 2025 exams.
Get your discount code >>

UNGEARED COST OF EQUITY

This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
March 26, 2022 at 7:33 am #651898
shaunak22
Participant
- Topics: 220
- Replies: 41
if we use equity beta in CAPM model we get geared cost of equity
DOUBT – If we use asset beta in CAPM model will be we ungeared cost of equity?
March 26, 2022 at 9:18 am #651914
John Moffat
Keymaster
- Topics: 57
- Replies: 54513
Yes. If there is no gearing the equity beta is equal to the asset beta. Therefore using the asset beta gives the cost of equity if there is no gearing.
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.