Another way to develop beta for use in the CAPM is to unlever beta from a benchmark $($a collection of

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or an industry$)$ and re$-$lever beta for the subject company $($NOTE: This is useful for all publicly$-$traded companies, even though the book focuses using this for non$-$traded companies$).$ The procedure takes into account the how beta is affected by differences in

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between the subject company and the benchmark. First, the benchmark beta is unlevered to estimate the beta of the benchmark$$s assets $($as opposed to the beta of the benchmark's equity$).$ Unlevering removes the effect of the capital structure by$$

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the benchmark beta by $(1$ plus the benchmark's debt$-$to$-$equity$*$ ratio$)$ to find unlevered beta $($also called asset beta$).$ This unlevered beta will reflect just the

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$$arising from the economics of the industry. Then, the asset beta $($unlevered beta$)$ is re$-$levered to reflect the financial leverage of the subject company. Re$-$levering is

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$$the unlevered beta by $(1$ plus the subject company's debt$-$to$-$equity$*$ ratio$)$ to find levered beta $($also called equity beta$).$ The re$-$levered beta will reflect both the systematic risk of the industry the firm is in and the$$

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$$risk caused by financial leverage.