Equity beta: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Add Levered beta.) |
imported>Doug Williamson (Expand explanation of total equity risk.) |
||
| Line 1: | Line 1: | ||
In the Capital asset pricing model (CAPM), the relevant measure of total equity risk. | In the Capital asset pricing model (CAPM), the equity beta is the relevant measure of total equity risk. | ||
This total risk results from both: | |||
:(i) the underlying business risk and | |||
:(ii) the additional financial risk resulting from the level of debt in the firm’s financial structure (financial gearing). | |||
The equity beta is also known as Geared beta or Levered beta. | |||
| Line 7: | Line 14: | ||
* [[Beta]] | * [[Beta]] | ||
* [[Capital asset pricing model]] | * [[Capital asset pricing model]] | ||
* [[Equity]] | |||
* [[Equity risk]] | * [[Equity risk]] | ||
* [[Gearing]] | |||
* [[Ungeared beta]] | * [[Ungeared beta]] | ||
[[Category:The_business_context]] | |||
[[Category:Corporate_finance]] | [[Category:Corporate_finance]] | ||
[[Category:Identify_and_assess_risks]] | |||
Revision as of 15:19, 9 February 2019
In the Capital asset pricing model (CAPM), the equity beta is the relevant measure of total equity risk.
This total risk results from both:
- (i) the underlying business risk and
- (ii) the additional financial risk resulting from the level of debt in the firm’s financial structure (financial gearing).
The equity beta is also known as Geared beta or Levered beta.
