Unlevered beta (also referred to as asset beta) is the company’s beta score without taking into account the debt that it holds. It compares the volatility of investing in a company without any financial leverage to the risk of investing in the market. It is called the asset beta because the volatility of an unlevered company is simply the result of its assets. Asset Beta = Equity Beta / [1 + (1 - Tax Rate)(Debt/Equity)] Levered beta (or equity beta) compares the volatility of returns of a stock to that of the market. Equity beta takes into account the capital structure and leverage of a company, and therefore allows investors to determine how sensitivity a security could be to the macro-market risks. Equity Beta = Asset Beta x [(1 + (1 - Tax Rate)(Debt/Equity)] To unlever a beta (or to remove the debt impact), find the beta for a industry peer group and unlever each beta. Take the median of the set and relever it based on a company's capital structure. This levered beta can then be used in the calculation of cost of equity.