20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for December 2024 exams.
Get your discount code >>

what is the purpose of ungearing the beta? confused.

This topic has 1 reply, 2 voices, and was last updated 14 years ago by bridmw.

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

Author
Posts
November 14, 2010 at 5:30 pm #45971
jrow
Member
- Topics: 27
- Replies: 15
Hi,
Can anybody explain the difference between the asset and equity betas and why we ungear the equity (???) beta?
much appreciated.
November 14, 2010 at 10:16 pm #70560
bridmw
Member
- Topics: 5
- Replies: 132
We ungear the equity beta to see the risk that derives solely from the company’s business risk.
Asset beta is the ungeared beta.
Equity beta includes the gearing – it includes the financial and business risk.
Author
Posts

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

You must be logged in to reply to this topic.