Unlevered Beta

Definition

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.

Usage and Context

Unlevered beta shows a company's risk without considering debt, indicating equity volatility without leverage.

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.

Related Software

Bloomberg Terminal, Yahoo Finance

Benefits

Unlevered beta measures a company's risk without considering debt, providing a clearer view of equity volatility.

Conclusion

Unlevered beta gives a clearer picture of a company's risk profile by excluding the effects of debt.