Question

Two factors that cause the investor's required rate of return to differ from the company's cost of capital are

O risk and opportunity cost differences.
O taxes and risk.
O flotation costs and risk.
O taxes and flotation costs.

Answer 1

Two factors that cause the investor's required rate of return to differ from the company's cost of capital are risk and opportunity cost differences.

Step-by-step explanation:

Two factors that cause the investor's required rate of return to differ from the company's cost of capital are risk and opportunity cost differences.

The required rate of return for an investor depends on their risk tolerance. If an investment is considered riskier, the investor will demand a higher rate of return to compensate for the additional risk.

Opportunity cost differences can also affect the required rate of return. If an investor has alternative investment opportunities with higher returns, they may require a higher rate of return to choose a particular investment over the alternatives.