Opportunity Cost of Funds Is the Rate of Return That

question 1

True/False

Opportunity cost of funds is the rate of return that an investor can earn on another investment of similar risk.

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Definitions:

Retained Earnings

The portion of a business’s profits not distributed to shareholders, instead reinvested in the business or kept for reserve.

Cash Dividends

Payments made by a corporation to its shareholder members in the form of cash.

Stock Dividends

A dividend payment made to shareholders in the form of additional shares rather than cash.

Common Stock

A type of equity security that represents ownership in a corporation, providing voting rights and entitling the holder to a share of the company's success through dividends and/or capital appreciation.