The correct answer is: A. Risk-free Rate of Interest.
The risk-free rate of interest is the rate of return that an investor expects to receive on an investment with no risk of default. Government securities are considered to be risk-free investments, as the government is considered to be a very safe borrower. Therefore, the cost of capital for government securities is also known as the risk-free rate of interest.
The maximum rate of return is the highest possible return that an investor can expect to receive on an investment. This rate of return is typically higher than the risk-free rate of interest, as it reflects the risk that the investment may not generate the expected return.
The rate of interest on fixed deposits is the interest rate that a bank pays on a deposit that is held for a fixed period of time. This rate of interest is typically lower than the risk-free rate of interest, as the bank is considered to be a relatively safe borrower.