Glossary

Glossary

Term Book Chapter Definition
Cost of Capital CFA Level 1 Exam Chapter 5: Corporate Finance The rate of return a company must earn on its investment projects to maintain its value and attract investors. It's the opportunity cost of making a specific investment. It is calculated differently for debt and equity.
Cost of Capital Corporate Finance Chapter 6: Risk and Return The return required by investors to compensate for the risk of providing capital to a business. It serves as a critical benchmark for evaluating investment opportunities.