Levered and unlevered Beta

Preprint OPEN
Fernandez, Pablo;
  • Subject: unleveredbeta; levered beta; asset beta; value of tax shields; required return to equity; leverage cost;
    • jel: jel:G12 | jel:G31 | jel:M21

We prove that in a world without leverage cost the relationship between the levered beta ( L) and the unlevered beta ( u) is the No-costs-of-leverage formula: L = u + ( u - d) D (1 - T) / E. We also analyze 6 alternative valuation theories proposed in the literature to ... View more
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