Which type of beta is generally considered to be higher?

Levered beta is considered to be higher because it accounts for the company’s debt in the capital structure. When a company has debt, it introduces additional financial risk for equity holders. Levered beta reflects this increased risk by measuring the sensitivity of a company’s stock returns relative to market returns, taking into account how much leverage the company uses.

By comparison, unlevered beta strips out the effects of debt, providing a measure of the company's risk without the additional financial risk associated with leverage. Therefore, unlevered beta is generally lower than levered beta. Risk-free beta, which theoretically represents an investment with no risk, is also lower than levered beta, as it doesn't incorporate market volatility and company-specific risk factors. Market beta represents the average market risk, which typically does not exceed the leverage-induced risk reflected in levered beta.

Thus, it is the inclusion of financial leverage that causes levered beta to be higher, making it a key consideration in assessing the risk profile of a firm with debt in its capital structure.