Homework Answers
True
When the company doesn't have any debt than the levered beta is equal to unlevered beta.
Levered beta measures the volatility of the capital structure of the company taking into the account of debt and equity (Leverage) of the company while the unlevered beta measures the volatility of the company without taking in account of debt.
The formulae for calcualting levered beta is Levered Beta = Unlevered beta [ 1+ (1-t)* (Debt/Equity)]
Where "t" is Taxes
So, We know that when the debt becomes Zero the levered beta will become equal to levered beta because of absence of debt.
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