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We make use of CAPM to estimate the opportunity cost of capital for venture capital investment of well-diversified investors.
He also recognizes that, from time to time, when there is excess capacity, the opportunity cost of capital will drop.
In equilibrium, the opportunity cost of capital must be equal to the sum of the cash flow plus the expected (and actual) appreciation.
Of course, the opportunity cost of capital will generally exceed the financial cost of capital because one does not normally borrow money in business affairs unless one expects to make a profit on the money borrowed.
Hence, the opportunity cost of capital or required rate of return will typically depend on total risk, not just systematic or market risk, in these circumstances.
A candidate variable for resolution of uncertainty is the opportunity cost of capital.
Acquiring capital from internal sources requires that executives determine the opportunity cost of capital invested to back businesses and strategies.
However, the EMH does not prevent firms from earning economic rents, defined as profits that cover the opportunity cost of capital, which is a concept identical to EVA.
Approximately half of the Tufts-industry estimates are attributed to financing costs, known as the opportunity cost of capital.

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