标题: Allocation shareholder capital to pension plans, Confused [打印本页] 作者: cjs238 时间: 2011-7-11 18:56 标题: Allocation shareholder capital to pension plans, Confused
Reading 22 Questions:"Firm: As D/E increase, risk increases. Because Equity Beta = (1+D/E)* Firm Beta"
Why we judge risk by equity Beta not Firm Beta?
Edited 1 time(s). Last edit at Saturday, April 9, 2011 at 12:17AM by baifan.作者: strikethree 时间: 2011-7-11 18:56
because shareholders hold equity positions?作者: Colum 时间: 2011-7-11 18:56
As we consider firm's risk, we only means the risk of the shareholders?作者: Iginla2011 时间: 2011-7-11 18:56
As we consider firm's risk, we only mean the risk of the shareholders?作者: thommo77 时间: 2011-7-11 18:56
I havent looked at this question. However, consider this scenario.
Same firm
1. 99% debt
2. 0% debt
If only considering asset beta, you would think each scenario would have equal risk. Obviously, it doesn't. Capital structure definitely plays a role in a firm's risk.
