anonymous
  • anonymous
Hi, I have a problem with calculating the beta of debt. My company is BBB- rated and I looked up an appropriate default spread of 3,2%. My risk premium is 4,2%. according to the capm, the beta of debt should be calculated by defaultspread/riskpremium. this yields more than 0,7 in my case and from what I have heard is way too high for a beta of debt. Why cant I estimate the beta of debt via the capm? damodaran in his book at some point says that he assums that only 50% of the default spread carries market risk and therefore divides the beta I obtain by 2. But I thought idiosyncratic risk is
Finance
  • Stacey Warren - Expert brainly.com
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SOLVED
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katieb
  • katieb
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anonymous
  • anonymous
not priced in by assumption in the CAPM.
anonymous
  • anonymous
not priced in by assumption in the CAPM.
anonymous
  • anonymous
0.0

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