Equity beta

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.

See also

• Beta
• Capital asset pricing model
• Equity
• Equity risk
• Gearing
• Ungeared beta