The rate of return on the best available alternative investment of equal risk is the risk-adjusted required rate of return.

Question

Quizplus · Accepted Answer

The rate of return on the best available alternative investment of equal risk is referred to as the opportunity cost of capital, not the risk-adjusted required rate of return. The risk-adjusted required rate of return is the minimum return an investor expects to achieve by investing in a particular risky asset, taking into account its risk level.

The Rate of Return on the Best Available Alternative Investment