CFA Mock 2012 - Q55 AM - Unlevered beta companies, question, getting

Howd

Hi guys
This question requires us to CALCULATE the unlevered beta then lever it. The LOS for this doesnt state calculate but it is
” Explain beta estimateion for public companies, thinly traded public companies and nonpublic companies.
Why are they getting us to calculate this then?

optiix

Its in the material, its fair game.

Iginla2010

it may be that this question was taken from a prior year mock/sample/exam when the unlevering and relevering of beta calc was part of the LOS. It’s not particularly difficult to re-lever beta so learning the calc may help you understand the concept and eventually “explain” it.

sameeragarwal

youre thinking of M&M. Taxes do not affect Beta.

Zestt

I will revise my statement. In CFAI world, tax shield does not affect Beta. Question is correct (pg 78 Equity)

Wendy01

Wasn’t the calculation at level 1 also? Based on this its fair game right? Regardless given they put it on the mock the chances of it showing up Saturday are…yea you do the math.

ShooterMcCFA

who the heck knows… I was blasting Schewser with 80-85’s and now I get a 72 on this Mock. Way to ruin my confidence, CFAI.

rkapoor

In CFAI world, tax shield does not affect Beta. i agree. i don’t remember it affecting it.