The rate of return available on the next best investment alternative for the saver refers to the opportunity cost of funds.

Question

Quizplus · Accepted Answer

This statement is true. Opportunity cost refers to the cost of choosing one option over another, and in this case, the opportunity cost of using funds to invest in a certain option is the rate of return that could have been earned from the next best investment alternative.

The Rate of Return Available on the Next Best Investment