Notes on Equity and Asset Beta right

hoangvu90

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]

bolligerallstar

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

5566

Leverage = A/E

To unlever , divide

To re-lever , multiply

chaojimali

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