The beta (β) of investment security (i.e., a stock) is a measure of its volatility of returns in comparison to the market as a whole. It serves as a risk indicator and is crucial to the Capital Asset Pricing Model (CAPM).
A higher beta means greater risk and higher expected profits for the company.
Because 1.0 is the benchmark for beta, everything above 1.0 is more variable and carries more inherent risk.
β Unlevered = β(Levered) / [1 + (Debt/Equity) (1-T)]
β Levered = β(Unlevered) * [ 1+ (Debt/Equity) (1-T)]