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anonymous
 5 years ago
Hye, may i know how to calculate Debt Beta?
anonymous
 5 years ago
Hye, may i know how to calculate Debt Beta?

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anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0Calculate the real resources cost of the investment. The real resource is the amount that the creditors have invested. Add 1 with the riskfree rate of interest, then divide that number by 1 minus the actual premium. Subtract this solution by 1 to figure out the real resources cost. The riskfree rate is the basis of the assets, but it includes the risk premium. Calculate the default risk premium. Take the real resource cost and subtract it by the riskfree rate of the interest. The calculation must be in percentage or decimals. Complete the calculations by adding the riskfree rate to the default risk premium.

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0I dont quite understand, this sound like cost of debt, how about the Beta for debt (assume is not Zero)

anonymous
 5 years ago
Best ResponseYou've already chosen the best response.0Here is the simplest way and you can use it, if have a pretax cost of debt computed for your company: Beta for debt = (Pretax cost of debt  Riskfree rate)/ Equity Risk Premium
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