Back to Finance Glossary | Previous PageOpportunity cost refers to the forgone benefits due to the choice of a different course of action. In other words, opportunity costs are what you give up when you pursue one opportunity over another option.
In a banking context, opportunity cost usually refers to forgone income that is not earned because idle funds have not been invested. Opportunity cost can also refer to the yield available on the next best alternate use of an institution's funds.
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