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    If the beta of an ungeared company was 1.5 before issuing corporate bonds to
    raise further capital of an amount equal to its market capitalisation and they used 30
    per cent of the money raised to buy back existing shares, then what would the beta of the company be following the buy back?
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    (Original post by Bruce Harrisface)
    If the beta of an ungeared company was 1.5 before issuing corporate bonds to
    raise further capital of an amount equal to its market capitalisation and they used 30
    per cent of the money raised to buy back existing shares, then what would the beta of the company be following the buy back?
    this is not maths, this is economics :banghead:

    since no one has helped im guessing no one can understand what this means (as usually maths is very quick to reply). So could you explain a few things;

    1.beta of an ungeared company - huh?
    2. what does it mean for a beta to be "1.5"
    3. raise further capital of an amount equal to its market capitalisation - market what?? :confused:
    4.what does buying back existing shares do/mean?
 
 
 
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