Asked by
Vanessa David
on Nov 07, 2024
Verified
The equity beta of a firm depends on the firm's business risk and its financial policy.
Equity Beta
A measure of a stock's volatility relative to the overall market volatility.
Business Risk
The equity risk that comes from the nature of the firm’s operating activities.
Financial Policy
Strategic decisions regarding a company's financial management, including borrowing, spending, and investing.
- Understand how a firm’s business risk and financial policy impact its equity beta.
Verified Answer
MJ
Learning Objectives
- Understand how a firm’s business risk and financial policy impact its equity beta.