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anonymous

  • 5 years ago

should we consider negative D/E ratio in calculating Levered Beta ?

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  1. anonymous
    • 5 years ago
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    D/E ratio should be market values when calculating levered beta. I don't see how this ratio can be negative

  2. anonymous
    • 5 years ago
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    you can consider negative ration only in a short period...never for long period

  3. anonymous
    • 5 years ago
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    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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