Geared beta: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson m (Link with Ungeared beta page.) |
imported>Doug Williamson (Expand.) |
||
| Line 1: | Line 1: | ||
In the Capital asset pricing model (CAPM), the geared 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 level of debt may be an actual current level, or a future assumed or prospective level, used for modelling purposes. | |||
The equity beta is also known as Levered beta or Equity beta. | |||
== See also == | == See also == | ||
* [[Equity | * [[Beta]] | ||
* [[Capital asset pricing model]] | |||
* [[Equity]] | |||
* [[Equity risk]] | |||
* [[Financial model]] | |||
* [[Gearing]] | * [[Gearing]] | ||
* [[Ungeared beta]] | * [[Ungeared beta]] | ||
[[Category:Corporate_finance]] | |||
[[Category:Identify_and_assess_risks]] | |||
Latest revision as of 15:27, 9 February 2019
In the Capital asset pricing model (CAPM), the geared 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 level of debt may be an actual current level, or a future assumed or prospective level, used for modelling purposes.
The equity beta is also known as Levered beta or Equity beta.
