The Minimum Rate of Return Necessary to Attract an Investor

question 12

True/False

The minimum rate of return necessary to attract an investor to purchase or hold a security is called the cost of capital.

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Definitions:

Production Cost

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead.

Expected Rate Of Return

A calculation representing the probable return on an investment, accounting for the risk of different investment options and the likelihood of various outcomes.

Marginal Cost

The extra expenditure required to produce one additional unit of a product or service.

Marginal Benefit

Marginal Benefit is the additional satisfaction or utility gained by consuming one more unit of a good or service.