• Opportunity cost:

Opportunity cost is the value of what you lose when choosing between two or more options. When
you decide, you feel that the choice you’ve made will have better results for you regardless of what
you lose by making it. As an investor, opportunity cost means that your investment choices will
always have immediate and future losses or gains.

• Opportunity cost of an activity is equal to the value of next best alternative which is sacrificed or
given up or forgone in choosing a given alternative.

• Formula of Opportunity cost = Return of Investment from the best option available – Return of
investment from the chosen option.