Leveraged Beta

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Definition: Leveraged Beta

Leveraged beta is the Beta of a firm having a financial leverage. It reflects the capital structure that includes debt. It changes in positive correlation with the amount of debt a firm has in its financial structure i.e. as firm increases its financial leverage the firm's levered beta increases


Formula:


The unlevered beta is mostly slightly higher than the leveraged beta. Leveraged beta shows the limited volatility.


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