An estimation of the opportunity cost of capital for projects that have an "average" level of risk is the expected rate of return on:
A) Treasury bills.
B) the market portfolio.
C) the market portfolio minus the rate of return on Treasury bills.
D) Treasury bonds plus a maturity premium.

Question

Quizplus · Accepted Answer

The opportunity cost of capital for projects with an "average" level of risk is typically estimated using the expected rate of return on the market portfolio, as it represents the return required by investors for taking on average market risk.

An Estimation of the Opportunity Cost of Capital for Projects