Unlevered Beta: Assessing Risk And Return

Formula Unlevered Beta measures risk by adjusting a company’s beta for its level of financial leverage. It involves comparing the company’s unlevered beta, calculated using its debt-to-equity ratio and WACC, to a comparator company’s beta. Analysts and investors use this comparison to assess the company’s risk-free return, expected return, and cost of capital, aiding in decision-making.

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