Please confirm if this is right (if you are sure): Unlevered Beta = Asset beta = [Levered Beta] [1/(1+D/E)] Equity Beta = [Asset Beta] [(D+E)/E]
correct… but easier to remember if you use either: (1+D/E) or (D+E)/E they give you the same result i’m pretty sure
Yes the re-levered beta is :Unlev Beta*(1+ D/E) just remember to unlever the beta you use the comp set or company and to relever use the firm specific D/E
The equity and Alterntive Assets formulas are the freakin same thing. I’m taking it a step further, please follow me here: Equity material says: Unlevered = Levered (1/(1+D/E)) Levered = Unlevered (1 + D/E) Alternative Asset section says: Bequity = Bassets (1+ D/E) So my deduction is that: Levered = Bequity Unlevered = Bassets Thus, Unlevered Beta = Bassets = the beta of the firm independent of capital strucuture.
Leverage = A/E To unlever , divide To re-lever , multiply
Not sure where i saw this but an easier way to get the ratio’s is just take the inverse of equity to get leverage. .3 equity .7 d levered =1/.3= 3.33 d+e=are always going to one, lets to get confused about if you just 1/e