Finance Opportunity Cost is the potential return that comes with sacrificing one investment for another. It’s a measure of the loss of potential gain from making a choice between two or more options. For example, if you invest $1,000 in stocks, your opportunity cost might be the chance to invest that same $1,000 in bonds. The actual cost of this trade-off will depend on the opportunities available at any given moment. Understanding opportunity cost helps finance professionals make informed decisions about investments and evaluate the risk associated with them. Ultimately, it’s an essential tool for achieving financial goals.