Opportunity cost of funds is the rate of return that an investor can earn on another investment of similar risk.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the potential return that an investor gives up by choosing to invest in a particular asset or opportunity, as opposed to investing in an alternative option of similar risk. Therefore, it is the rate of return that the investor could have earned on the alternative investment that represents the opportunity cost.

Opportunity Cost of Funds Is the Rate of Return That