DEFINITION of 'Unlevered Beta'
A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta of a company without any debt. Unlevering a beta removes the financial effects from leverage.
The formula to calculate a company's unlevered beta is:
Where:
B_{L }is the firm's beta with leverage.
T_{c} is the corporate tax rate.
D/E is the company's debt/equity ratio.
BREAKING DOWN 'Unlevered Beta'
This number provides a measure of how much systematic risk a firm's equity has when compared to the market. Unlevering the beta removes any beneficial effects gained by adding debt to the firm's capital structure. Comparing companies' unlevered betas gives an investor a better idea of how much risk they will be taking on when purchasing a firms' stock.

Debt/Equity Ratio
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Why should I register as a Limited Liability Company (LLC) if I am selfemployed ...
Debt affects a company's levered beta in that increasing the total amount of a company's debt will increase the value of ... Read Full Answer >> 
What are the practical uses for unlevered beta?
A security's unlevered beta measures the volatility and performance of that security in relation to the performance of the ... Read Full Answer >> 
When is it better to use unlevered beta than levered beta?
It is better to use an unlevered beta over a levered beta when a company or investor wishes to measure a publicly traded ... Read Full Answer >> 
How does unlevered beta help in risk management?
Financial analysts and statisticians use unlevered beta to compare the risk of a single investment against the risk of investing ... Read Full Answer >> 
How should investors interpret unlevered beta?
Unlevered beta is the beta of a company that focuses only on its assets. It removes the amount of debt a company has in order ... Read Full Answer >> 
Can mutual funds use leverage?
Traditionally, mutual funds have not been considered leveraged financial products. However, a number of new products have ... Read Full Answer >>