Unlevered Beta
Unlevered Beta is a measure of how much risk a company`s equity has without the effect of debt, used in evaluating the volatility of a company without financial leverage.
Benefits
Unlevered beta measures a company`s risk without considering debt, providing a clearer view of equity volatility.
Frequently Asked Questions
What is unlevered beta in business risk?
Unlevered beta measures a company`s market risk without considering its debt, reflecting how volatile its equity is.
Is beta affected by leverage?
Yes, beta is affected by leverage, as increasing a company`s debt raises its risk and, consequently, its beta.
What is the unlevered beta of the cost of equity?
The unlevered beta of the cost of equity measures the volatility of a company`s stock without the effect of debt, showing its inherent business risk.
Key Takeaway
Unlevered beta gives a clearer picture of a company`s risk profile by excluding the effects of debt.