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    Question

    The return forgone for the undertaking an investment is

    known as?
    A IRR Correct Answer Incorrect Answer
    B YTM Correct Answer Incorrect Answer
    C Opportunity Cost of Capital Correct Answer Incorrect Answer
    D Current return Correct Answer Incorrect Answer

    Solution

    A person has an opportunity to earn 10% return from the various alternative investments available for her to choose from. If he decides to invest in another project, he loses on an opportunity to earn 10% rate of return from the existing investment. Therefore, the return forgone for the undertaking an investment is known as opportunity cost of capital.

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