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Understanding Financial Statements

Cost of Capit...

Question

Cost of Capital for Government securities is also known as ________________.

A

Risk-free Rate of Interest

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B

Maximum Rate of Return

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C

Rate of interest on Fixed Deposits

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D

None of the Above

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Solution

The correct option is A Risk-free Rate of Interest
The risk free rate of return is the rate of return of an investment with zero risk. Cost of capital for Government securities are generally considered as risk free rate of interest.

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