How to Make Good Decisions (Opportunity Cost Matrix)
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What is an 'Opportunity Cost'
Opportunity cost refers to a benefit that a person could have received, but gave up, to take another course of action. Stated differently, an opportunity cost represents an alternative given up when a decision is made. This cost is, therefore, most relevant for two mutually exclusive events. In investing, it is the difference in return between a chosen investment and one that is necessarily passed up.
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How to Make Good Decisions (Opportunity Cost Matrix)
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