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dreampak

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tT
发表于 2011-7-13 13:45 | 只看该作者

Unlevered beta

company
Unlevered beta = (1/(1+D/E) B_levered company

Isn't a short cut to this as follows?

Unlevered beta = E/100 B_levered company

Looks equal to me.
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huangxiaoxie

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2#
发表于 2011-7-13 13:45 | 只看该作者
why do you say E/100- unless you plan to replace E in percentage with respect to Total Market cap it will not hold

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ryanlb

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3#
发表于 2011-7-13 13:45 | 只看该作者
D=1-E, do the math.

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Pegasus2008

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4#
发表于 2011-7-13 13:45 | 只看该作者
I just tried this formula with D to E of 2 to 3 and it works... Both equal O.6 times levered beta

Only problem with this is that why bother changing the formula? In order to find out your total E you need to consider it in relation to assets and debt so it doesn't help you

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mp3bu

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5#
发表于 2011-7-13 13:45 | 只看该作者
yeah I can remember it like this too. cool!

just to do an example, dreary i hope you are putting E as %.

so if
D = 20%
E = 80%
Beta = 1.2


UB = 80/100 * 1.2 ==> 4/5*1.2 = .96

If the other company we are trying to lever has D= 30%, E = 70%, then you get
leveredB = .96 / .7 = 1.37 which makes sense, cuz more Debt means higher beta? is that true?

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bingbingliang

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6#
发表于 2011-7-13 13:45 | 只看该作者
Yep the one with the higher D/E is the one with the higher beta.

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ninja1024

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7#
发表于 2011-7-13 13:45 | 只看该作者
just to be sure....the one with the higher D/E, not the higher debt.

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ap0258

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8#
发表于 2011-7-13 13:45 | 只看该作者
righto! its all about D/E ratio.

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scarecrow

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9#
发表于 2011-7-13 13:45 | 只看该作者
This is why I was originally confused to why the change in formula...makes sense though if you can't remember the real one

I just wouldn't want to get confused when they throw the capital structure in various ways... D/E, or D/A et cetera.... be careful with these ratios more importantly in calculating WACC

A very common mistake people do is they use the D/E ratio in the weighting for Debt in calculating WACC rather than changing it to D/A (i.e., D/D+E)

I had a corporate finance class in my masters program and this kind of stuff is my favorite...corporate finance section is the bomb

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xilige

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10#
发表于 2011-7-13 13:45 | 只看该作者
Now that's not working hard.. that's working smart... thanks man

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