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Beta, Leverage, and the Cost of Capital
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Reference: FN-616-E
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Number of pages: 8
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Publication Date: Nov 7, 2013
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Source: IESE (España)
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Type of Document: Technical Note
Description
This note briefly discusses the versatile and widely-used technique of levering and unlevering beta, which has many and varied applications in finance. The note addresses the intuition and relevant mathematical expressions of this technique, and illustrates its usefulness with a practical application focusing on Starbucks.
Learning Objective
Necessary to illustrate the technique of levering and unlevering beta, which has multiple uses in finance.