For a free-risk investment, the opportunity cost of capital will generally be more than the interest rate offered by U.S. Treasury securities with a similar term.

Question

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For a free-risk investment, the opportunity cost of capital will typically be equivalent to or lower than the interest rate offered by U.S. Treasury securities with a similar term. This is because investors will demand a higher return for taking on additional risk beyond that of U.S. Treasury securities.

For a Free-Risk Investment, the Opportunity Cost of Capital Will