Intuitive explanation of levered Beta formula, anyone?HF
I am sorry if this question seem stupid/simple, but still I'd greatly appreciate your help.
= Unlevered Beta * [1 + (1 - Tax Rate) * Debt / Equity ]
Unlevered Beta = something we see on Yahoo Finance
Could someone please take a shot and explain why we multiply by [1 + (1 - Tax Rate) * Debt / Equity ] and not something else? Was this formula discovered intuitively based on previous finance formulas, or was it more of "This is the law, learn it"?