In corporate finance, Hamada's equation, named after Robert Hamada, is used to separate the financial risk of a levered firm from its business risk. The equation combines the Modigliani-Miller theorem with the capital asset pricing model. It is used to help determine the levered beta and, through this, the optimal capital structure of firms.

The Hamada equation is a fundamental analysis method of analyzing a firm's costs of capital as it uses additional financial leverage, and how that relates to the overall riskiness of the firm. The measure is used to summarize the effects this type of leverage has on a firm's cost of capital (over and above the cost of capital as if the firm had no debt). The equation is:

papers.ssrn.com [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.jstor.org [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.jstor.org [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.jstor.org [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.jstor.org [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.tandfonline.com [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.emerald.com [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

onlinelibrary.wiley.com [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

www.sciencedirect.com [PDF]

… 1 Date: Presented at the American Finance Association annual meeting 1993, Revised March, 2014 … Page 4. THE HAMADA EQUATION RECONSIDERED, JAMAL MUNSHI, 2014 4 … We present a comparison of the two equations using numerical methods …

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