Beta, in the Capital Asset Pricing Model, measures systematic risk i.e. how sensitive a stock is to market volatility (using a proxy such as a stock index). It determines the return over the risk-free rate an investor should demand for holding that stock. Levered beta (equity beta) is the beta of a firm including the effect of its capital structure: high debt levels heighten the company’s risk profile. Unlevered beta (asset beta) excludes debt leverage hence includes only a company’s equity financing, reducing the risk to the company’s assets i.e. business risk.