![]() ![]() School Xiamen University Malaysia Course Title ACC 201 Uploaded By CountFire3335. Similarly the beta factor of a high geared company is. Let me summarise the key rules for this part of the syllabus…. Similarly the beta factor of a high geared company is greater than the beta. ![]() Once you have found the new asset or ungeared beta in this way then once again you will have to RE-GEAR it in order to add in the Financial Risk element in accordance with how the new project is to be financed (ie the D/E mix). If the new project is to be in the SAME industry then all you have to do is RE-GEAR the asset or industry beta calculated above using the debt equity mix of the new project.īut, if the new project is to be in a new industry then your starting point will have to involve finding that particular asset or industry beta – usually by DE-GEARING the EQUITY beta of a similar company within the industry of the new project. Now you only have the business risk element left … this now reflects the risk of the industry that the company operates in, i.e this is the asset or un-geared beta. Usually, in the EXAM, the order is DE-GEAR the beta you have been given in the question in order to remove the financial risk element. With regard to un-gearing and re-gearing … ![]() please don’t start to panic this close to the exam … take a deep breath … you are doing fine. I’ll have a look at your parity query later tonight when I have time and will endeavor to make it as simple as possible for you, sorry about the delay…. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |