Levering beta asset and beta equity

Dronaldo's picture
Rank: Chimp | banana points 12

I got a quetion concerning levering/unlevering betas asset/equity

When we lever beta asset we should use formula:
Beta(asset.lev) = Beta(asset. unlev)[1+(1-t)D/E]
When we lever beta equity we should use formula:
Beta(eq.lev) = Beta(eq.unlev)+[Beta(eq.unlev) - Beta(debt)]
(1-t)*D/E

Is this correct and how do these two formulas correspond with each other?

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May 28, 2016

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RiskManager2318

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