1. Cost Of Capital At Ameritrade
... " beta, then we"re measuring the systematic risk of the cash flows associated with real asset. Think of the firm's balance sheet. The asset beta measures the systematic risk of the left-hand side of the balance sheet. Equity and debt are on the right-hand side of the balance sheet. We can also measure the systematic risk of those. Recall - the balance ... sheet must balance! CAPM asset beta The balance sheet requires: (rasset) = (D / D+E) * (rdebt) + (E / D+E) * (requity) And, by extension, the same relation holds for beta: (betaasset) = (D / D+E) * (betadebt ... ...
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- Approx Pages: 4
- Grade Level: High School