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UNGEARED COST OF EQUITY

SSHAWN4y ago
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?
John MoffatJohn MoffatTutor4y ago#1
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.
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