Bibliography: pages 234-247. / The Capital Asset Pricing Model (CAPM) postulates that beta is a quantitative measure of a company's undiversifiable risk, the determinants of which are of considerable interest to financial managers and investors alike. Analytical research has shown that beta is a positive function of a company's unlevered or asset beta and its market value debt to equity ratio (i.e. financial leverage). In turn, unlevered beta has been shown to be a positive function of a company's operating leverage, and the trade-off between operating and financial leverage proposed as a means of stabilising beta. The objective of this research was to empirically determine the nature of the relationships ยท between: beta and financial leverage; beta and operating leverage; and financial and operating leverage. A significant level of positive association was hypothesised between beta and both financial and operating leverage, while a significant negative association was hypothesised between financial leverage and operating leverage.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uct/oai:localhost:11427/16112 |
| Date | January 1996 |
| Creators | Troughton, Mark Timothy |
| Contributors | Flynn, David |
| Publisher | University of Cape Town, Faculty of Commerce, College of Accounting |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Master Thesis, Masters, MCom |
| Format | application/pdf |
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