Difference between revisions of "Hamada formula"
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* <math>{T_c}</math> is the corporate tax rate. | * <math>{T_c}</math> is the corporate tax rate. | ||
| − | == The point of the unlevered beta is to ''''remove'''' the debt risk from a publicly known company in a sector comparable to your own company ('unlever the beta') add your own debt risk and 'lever' the beta.== | + | ==+ The point of the unlevered beta is to ''''remove'''' the debt risk from a publicly known company in a sector comparable to your own company ('unlever the beta') add your own debt risk and 'lever' the beta.== |
Latest revision as of 19:24, 27 August 2020
Levered Beta is the beta that reflects a capital structure that does include debt. The Unlevered Beta is the Beta of a company without any debt. Unlevering a beta removes the financial effects from leverage.
=
Where:
- is the levered, published beta
- is the companies debt
- is the companies equity
- is the corporate tax rate.