A beta above 1 means the share is more volatile than the market. When valuing private companies, comparable companies' betas are unlevered and relevered to the target capital structure.
Related terms
Capital asset pricing model (CAPM)A model that calculates the cost of equity from the risk-free rate, beta and the market risk premium.Cost of capitalThe minimum rate of return investors expect from an investment in return for the risk they take.Weighted average cost of capital (WACC)The average of the costs of a company's equity and debt financing, weighted by their share of the capital structure.Break-even pointThe sales volume or amount at which total revenue equals total cost and the business makes neither profit nor loss.Completion accountsFinancial statements prepared as at the closing date of an acquisition, through which the final price is set by net debt and working capital adjustments.Control premium and discount for lack of marketabilityA control premium is the extra amount paid for a stake that gives control of a company; a discount for lack of marketability is a reduction in value for shares that cannot easily be sold.
Last updated: October 31, 2026 · This definition is for general information only.