What does a lower unlevered beta indicate about a company's risk?

The Weighted Average Cost of Capital (WACC) has significant implications for a company's financial strategy. It represents the average rate a company should pay to finance its assets. Therefore, it can influence decisions about capital structure, investment, and risk management. A higher WACC indicates that a company is more volatile and riskier than the market average, which may require a more conservative financial strategy. Conversely, a lower WACC suggests that a company is less risky, potentially allowing for more aggressive investment strategies.

The unlevered beta contributes to the risk assessment of a company by indicating its volatility and risk level compared to the market average. A higher unlevered beta means that a company is more volatile and riskier than the market average, while a lower unlevered beta means that a company is less risky.