Question

P4 - AFM - What is beta ? What is geared beta, asset beta & ungeared beta ?

Hi there,

This is my last exam and a first attempt. I need to know the following in little bit detail with example:

1. What is beta ? and Where it will be used in P4 ?
2. What is asset beta and geared beta ? What are the indicators that we will use during calculation in exam ?

3. When should we use such type of betas (i.e. asset beta & geared & ungeared beta) ?

   There are some concept in book by explaining steps by steps approach, like:

4.Ungear beta then regear beta. My question is what are these ? Why and When we use such steps ?

I have a major knowledge Gap between F9 and P4, therefore, I forgot the terms, usage and its importance.

Kindly answer the above as sequenced? You can add more if it gives me further insight?

Thanks

Answer 1

If you are interested, I can teach you AFM. As answering your above questions will take some time to explain.