anonymous
  • anonymous
should we consider negative D/E ratio in calculating Levered Beta ?
Finance
katieb
  • katieb
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anonymous
  • anonymous
D/E ratio should be market values when calculating levered beta. I don't see how this ratio can be negative
anonymous
  • anonymous
you can consider negative ration only in a short period...never for long period
anonymous
  • anonymous
I assume that you are using net debt and market equity to come to a negative D/E ratio. In that case, it is perfectly consistent to use the negative D/E ratio and end up with a levered beta that is lower than your unlevered beta... (the cash pulls the beta of equity down ...)

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