CIMA F3 Geared and ungeared betas (1)

[@kennethrobertson5670]

Thank you for your explanation.

[@jrc00u]

Beta of the debt isn't about the risk of the government defaulting, beta of the debt is about the risk of the business defaulting on bond payments.

[@raymondagyenkwa3088]

Good explanation

[@beomkomap]

Hi sir. Why E=1 in the Asset Beta equation please? Is it because we assume D/E=0.4/1?

[@EthailDagim]

can we say the higher gearing ratio will have the higher ungearing ratio value ?

[@opentuition]

There is no such thing as an ungearing ratio'.

[@mbalenhlengwazi2305]

Shouldn't the numerator be 0.6 and 0.8 respectively as it relates to Equity portion?

[@jrc00u]

Did you mean the gearing ratio? The gearing ratio used is the example is debt / equity and not debt / (debt+equity) variation.

[@albertaakubia6678]

@@jrc00u thanks

[@thabanimaposa9946]

Just stick what the formula says man... it adds to the confusion