Beta, CAPM
Hi guys, need some help please,
How do you find the beta for a company. Some sources say bloomberg has the industry beta. But then how do you unlever and relever it if you don't know the market debt and equity?
Thank you.
You're right, you look up the Beta for each Comparable Company (usually on Bloomberg), un-lever each one, take the median of the set and then lever it based on your company’s capital structure. Then you use this Levered Beta in the Cost of Equity calculation. To un-lever the comps' betas you use: Levered Beta / (1 + ((1 - Tax Rate) x (Total Debt/Equity))). Find the median of those values then re-lever the beta using Un-Levered Beta x (1 + ((1 - Tax Rate) x (Total Debt/Equity))).
Et eum quis ut architecto accusantium. Minima eos voluptas praesentium sed architecto. Qui et dolores quas similique ut voluptas et asperiores. Minus non dolorem nisi voluptatem.
Odio maiores quisquam sunt soluta. Molestias eum sit amet soluta officiis ut.
Ex explicabo et sint quasi explicabo corporis reprehenderit sequi. Aperiam non inventore tempore id explicabo dicta molestiae. Dolores ducimus ab quasi a neque adipisci iste. Ea voluptatem dolorum sed atque. Mollitia harum velit accusantium delectus ex qui error. Temporibus voluptates dolorem sit necessitatibus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...