Pure play method

It is not on schweser and I lost a bit the point there … did u see it on the CFAI’s mocks do u think it is worth investing my time ?

In pure play use beta of a similar company instead of your beta, that’s all.

I’m loosing it when it comes to adjust with the beta for particular project under special financing (D/E ration) I got Beta asset; Beta equity; adjusted Beta for risk premium, leveraged/unleveraged Beta … that is reading 45

yeah, just memorize the formula. asset beta = equity beta (1 + (1 - D/E)) is tthat it?? omg i have forgotten the formula.

http://www.cfainstitute.org/cfaprog/resources/pdf/L1_Errata.pdf Check this for errata of reading 45, it is: Beta equity = Beta asset (1+(1-t)*D/E)

holy crap. they typing wrong formulas and i am memorizing it?

you are looking for the CAPM for a private company. One way to do it is to look at pure plays that are TRADED publicly. you take the market betas and unlever them, then relever them. Know the formulae, there will likely be one question on this in the test. Unlevering happens everyday on trading desks. tip: once you get your CAPM, you can start plotting on the SML