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Increase in Equity Beta
AFM
answered on 09-Sep-26 20:40
Sir, As far as I understand, an increase in equity beta would increase the cost of equity which in turn decreases the value of equity. So, should we not say the increased beta decreases the value of equity on account of leverage? [Video Time Stamp: 15:44]
latest answer
No. What we are talking abt here is that when beta value increases, the returns of a stock increase when market moves up Returns of a stock also move down when market moves down In case market moves up , the returns on equity stock increase to 3.03x as beta is 3.03. HIgher returns means higher price and hence higher value for share. What you are talking about is when When value of a firm does not increase as overall value is constant. In which case value of equity and debt keep changing with sum of their values remaining constant. However if Market performs well and consequently company performs well, because of higher leverage, PAT will be much higher and so will ROE, consequently overall value of equity will increase - high beta will lead to higher equity value in times of boom and vice versa
Gokul
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Increase in Beta Value
AFM
answered on 09-Sep-26 20:41
Sir, As far as I understand, an increase in equity beta would increase the cost of equity which in turn decreases the value of equity. So, should we not say the increased beta decreases the value of equity on account of leverage? [Video Time Stamp: 15:48]
latest answer
responded there
Gokul
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71
Systematic and Unsystematic Risk
AFM
answered on 08-Sep-26 17:35
Sir, Since risk is usually measured by taking the square root of the variance, why do we use variance instead calculating systematic risk? In exams, should we show both the variance and as well as the standard deviation of the systematic and unsystematic risk? [Video Time Stamp: 18:12]
latest answer
Depends on question If just word risk is used then compute both variance and sd
Gokul
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Consideration of growth rate for valuation of stock
AFM
answered on 08-Sep-26 09:56
Sir, For the valuation of stock as at the end of 2008, we have considered the growth rate of earnings rather than the growth rate of dividends If we consider the dividend growth rate, we get a different answer. [Video Time Stamp: 07:49]
latest answer
If we use payout ratio is solution we should focus on earnings growth and not dividend growth
Gokul
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48
Black Scholes Model
AFM
answered on 07-Sep-26 21:02
Dear Sir, In Black Scholes Model, how to calculate NT(d1) and NT(d2) value. Explain 24th Sum in pgno. 367 of Practise Book. Not only in that question in each and every question. Kindly explain.
latest answer
Pls go through videos Explained there. Also have a look At latest pdf where this is given You can also refer to yt forex revision lectures of mine where I have explained
PG Bhanusree
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Rationale behind taking Portfolio Return as Market Return
AFM
answered on 07-Sep-26 17:05
Sir, Since the problem doesn't provide the market return, can we calculate the portfolio beta and then multiply it by the portfolio's return to find the market return? [Video Time Stamp: 05:36]
latest answer
We are doing something similar only right? If u exactly what u r suggesting also we should ideally get same answer
Gokul
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61
Portfolio Managment
AFM
answered on 07-Sep-26 16:32
Sir in qn 5, why dont we take RF rate of respective year instead of Average RF Rate [Video Time Stamp: 27:47]
latest answer
We are computing overall beta while individual market and security returns move usually Rf rate does not change much So it is preferrable to take a single Rf even though you bond rates keep changing
AGALYA KANNAN
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61
Illustration 35
AFM
answered on 07-Sep-26 09:46
While computing EAC in this case we are dividing negative cash flows with PVAF. So shouldnt the final answer(EAC) be in negative? If no, why? [Video Time Stamp: 04:36]
latest answer
Since we are calculating EAC which stands for equivalized annual cost- we need not mention amount in negative - if you want to do please do - there is no harm
falcon paradox
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Q19
AFM
answered on 06-Sep-26 17:03
Can I get the marks if I present this way or I have to present the way to teach sir [Video Time Stamp: 11:58]
latest answer
Thanks sir
Santoshkumar Kalisetti
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Long short
AFM
answered on 06-Sep-26 13:56
Target beta grater than port. Beta means our portfolio value as on now is negative so we need to buy.? Like this can we think [Video Time Stamp: 21:10]
latest answer
Portfolio beta need not be be negative for us to buy As long as portfolio beta is less than target beta buy and if portfolio beta is greater than target beta then sell
Vinod Kumawat
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