An estimation of the opportunity cost of capital for projects that have an "average" level of risk is the 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 return on the market portfolio, as it represents the average risk-return trade-off in the market.

An Estimation of the Opportunity Cost of Capital for Projects