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The Opportunity Cost of an Item Is

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The opportunity cost of an item is


Definitions:

Expected Return

The weighted average of all possible returns for a given investment, based on probabilities of outcomes.

Standard Deviation

Measures the amount of variability or dispersion around an average, reflecting the risk associated with a variable’s stability in financial contexts.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically associated with government bonds.

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