1. Opportunity cost of capital (S2.1) Which of the following statements are true? The opportunity cost of capital:a. Equals the interest rate at which the company can borrow.b. Depends on the risk of the cash flows to be valued.c. Depends on the rates of return that shareholders can expect to earn by investing on their own.d. Equals zero if the firm has excess cash in its bank account and the bank account pays no interest.

The cost of capital refers to the expected rate of return that a company must earn on its…

Answered: 1. Opportunity cost of capital (S2.1)…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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