Equity beta: Difference between revisions
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The equity beta is also known as Geared beta or Levered beta. | The equity beta is also known as Geared beta or Levered beta. | ||
Latest revision as of 15:24, 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.
