Management & Financial Accounts
This query is : Resolved
22 November 2007
Please any one can help me how to calculate beta (B) which helps to calculate cost of equity and overall cost of capital.
Please any one can help me how to calculate beta (B) which helps to calculate cost of equity and overall cost of capital.
22 November 2007
Beta is a measure of risk of a security, say shares, vis-a-vis the market. The market beta is 1. If a security's beta is less than 1 it is less riskier than market. If it is more than 1 it is more riskier.
Beta is calculated my multiplying the Correlation co efficient between concerned security and market with the security Std.deviation and then dividing the resultant by market Std.deviation. Books on Portfolio Management carry practical problems. Using beta, Cost of equity can be calculated under CAPM Model.
Beta is calculated my multiplying the Correlation co efficient between concerned security and market with the security Std.deviation and then dividing the resultant by market Std.deviation. Books on Portfolio Management carry practical problems. Using beta, Cost of equity can be calculated under CAPM Model.
22 November 2007
Beta = Covariance / Variance
Beta = (SD of stock/ SD of markrt) * Correlation
Beta = (SD of stock/ SD of markrt) * Correlation
23 November 2007
Thanks Sir,
As I comes to know about how to calculate beta, please can you provide me the one example so that it will be more easier for me.
Regards Prabhakar
As I comes to know about how to calculate beta, please can you provide me the one example so that it will be more easier for me.
Regards Prabhakar
23 November 2007
Sd of stock 10 SD of market 15.
Correlation 0.5
Beta (10/15) * 0.5
= 0.3
Correlation 0.5
Beta (10/15) * 0.5
= 0.3
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ADVANCE PAYMENT OF ADVOCATE
- Depreciation of fixed assets- coop housing society in mumbai
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- TDS on Consultancy- Non DTAA
- CREDIT NOTES WITHOUT GST
- Query – TDS on purchase of land from NRI under Income-tax Act, 2025
- TDS Return Q1 FY 2026-27
- Management System (IMS)
- Condonation . E-Verification of last year return .
- Eway bill generation from place other than registeted
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
