Levered beta: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Create page. Sources: linked pages.) |
imported>Doug Williamson (Expand.) |
||
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 levered 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 Geared beta or Equity beta. | |||
Line 7: | Line 16: | ||
* [[Beta]] | * [[Beta]] | ||
* [[Capital asset pricing model]] | * [[Capital asset pricing model]] | ||
* [[Equity]] | |||
* [[Equity risk]] | * [[Equity risk]] | ||
* [[Financial model]] | |||
* [[Gearing]] | * [[Gearing]] | ||
* [[ | * [[Leverage]] | ||
* [[Ungeared beta]] | * [[Ungeared beta]] | ||
[[Category:Corporate_finance]] | |||
[[Category:Identify_and_assess_risks]] |
Latest revision as of 15:29, 9 February 2019
In the Capital asset pricing model (CAPM), the levered 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 Geared beta or Equity beta.