Tidewater Fishing Has a Current Beta of 1

question 85

Multiple Choice

Tidewater Fishing has a current beta of 1.48. The market risk premium is 8.9 percent and the risk-free rate of return is 3.2 percent. By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.60?

• A)0.88 percent
• B)1.07 percent
• C)1.50 percent
• D)2.10 percent
• E)2.26 percent

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Definitions:

Cleaning Hours

Refers to the quantity of labor or time allocated specifically for the purpose of cleaning within a given period.

Tragedy of the Commons

A situation where individuals, acting independently according to their own self-interest, deplete or spoil shared resources, leading to long-term negative outcomes for the whole community.

Joint Action

Refers to the collaborative efforts or initiatives taken by groups or entities to achieve a common goal.

Common Resource

A type of good that is non-excludable and rivalrous, meaning it is difficult to prevent anyone from using it, but one person's use diminishes the quantity or quality available to others.