The P/B Leveraging Equation

Chapter 5 gave the leveraging equation for P/B:

        Levered P/B = Unlevered P/B + [Book Leverage x (Unlevered P/B – 1)]

The equation can be expressed in terms of B/P rather than P/B:

In the P/B equation, leverage is book leverage =In the B/P version, leverage is market leverage =

 

 

 

 

 

 

 

 

 

Scroll to Top