The alternative price of holding the underperforming asset might rise to the place the rational investment option is to sell and put money into the more promising funding. Again, an opportunity value describes the returns that one could have earned if he or she invested the money in another instrument. Thus, whereas 1,000 shares in firm A may finally promote for $12 a share, netting a revenue of $2,000, throughout the same interval, company B increased in value from $10 a share to $15.
3. Identify alternate options and evaluate opportunity cost
It is usually stated that it’s not what … Read More