A Beta value greater than 1 implies a high-risk stock compared to market volatility. Levered Beta with a value of 1 has the same volatility as the stock market, hence it is considered a medium risk stock. Levered Beta is then calculated as a function of Unlevered Beta and a stocks debt to equity ratio. Removing the debt component from the risk factor calculation gives the value of Unlevered Beta. These are unmitigated risks that investors and firms have little to no control over. A stocks performance is influenced by several macroeconomic and microeconomic factors - like paucity of resources, political upheavals, natural calamities, etc. The Levered Beta of a stock is read in relation to the volatility of the stock market. Back to: BUSINESS & PERSONAL FINANCE How is a Levered Beta Used? A company with increasing debt while the equity value stays constant carries a higher risk value. The amount of debt a firm owes in relation to its equity holdings makes up the key factor in measuring its Levered Beta for investors buying its stocks. equity, is called Levered Beta or Equity Beta. In a Capital Asset Pricing Model (CAPM), the risk of holding a stock, calculated as a function of its financial debt vs. Update Table of Contents What is a Levered Beta? How is a Levered Beta Used? Example of How to Calculate Levered Beta What is a Levered Beta?
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