Required Return vs. Cost of Capital


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Whose perspective does the required return represent in considering opportunity cost?

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1. Whose perspective does the cost of capital represent in considering opportunity cost?

2. What term refers to the combined and weighted average of the costs involved in issuing securities?

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About This Quiz & Worksheet

How does required return differ from cost of capital? Check your knowledge of these differences as well as the definition of both by using the quiz and worksheet.

Quiz & Worksheet Goals

The goal of these tools is to check your comprehension of:

  • The definition of opportunity cost
  • Perspective of the required return in considering opportunity cost
  • A perspective that the cost of capital represents in considering opportunity cost
  • Characteristics of required returns
  • A term that refers to the combined and weighted average of the costs involved in issuing securities

Skills Practiced

  • Distinguishing differences - compare and contrast main topics, such as required returns and the cost of capital
  • Information recall - access the knowledge you have gained about the meaning of an opportunity cost
  • Interpreting information - verify that you can read information about properties of required returns and interpret them correctly

Additional Learning

Develop a better understanding of these financial topics with the lesson titled Required Return vs. Cost of Capital. You can cover these goals quickly:

  • Review examples of a required return
  • Determine what cost of capital refers to
  • Understand why companies look at opportunity costs