Why would it be true that the difference between Macaulay
duration and modified duration is small when the yield to maturity
is low?
Answers
The difference between Macaulay duration and modified duration is small when the yield to maturity is low due to the reduced impact of changes in yield on the bond's cash flows and present value.
Macaulay duration measures the weighted average time until a bond's cash flows are received, while modified duration adjusts for changes in yield. When the yield to maturity is low, the impact of changes in yield on the bond's cash flows and present value is relatively small. As a result, the difference between Macaulay duration and modified duration becomes small.
At lower yields, the cash flows of a bond are weighted more heavily towards the later periods, as the present value of future cash flows increases. Since changes in yield have a smaller impact on the present value of future cash flows at lower yields, the modified duration, which measures the percentage change in price for a 1% change in yield, is not significantly different from the Macaulay duration.
In contrast, at higher yields, changes in yield have a larger impact on the present value of cash flows, leading to a greater difference between Macaulay duration and modified duration. This is because higher yields reduce the present value of future cash flows, which are weighted more heavily in the Macaulay duration calculation.
When the yield to maturity is low, the difference between Macaulay duration and modified duration is small because the reduced impact of changes in yield on the bond's cash flows and present value results in less variation between the two measures.
Learn more about bond's cash flow here: brainly.com/question/28317519
#SPJ11
Related Questions
1. Which of the following BEST defines a down payment?
1. A down payment is a portion of the purchase price that increases the loan amount.
2. The down payment is the good faith escrow deposit.
3. A down payment is a portion of the purchase price that reduces the loan amount.
4. The down payment is the total amount borrowed for purchasing or leasing a car.
Answers
Answer:
3
Explanation:
It has to be this one because it is intial payment to help someone.
A pillow is a raw material?
True
O False
Answers
False, a pillow is not a raw material. However, it's made of raw materials like:
- polyester
- linen
- satin
- silk
- etc....
What can a boosted post help an advertiser achieve?
Answers
A boosted post helps an adviser to connect with the audience and gain trust.
Boosted post is a kind of post that is used on social media platforms in order to enhance the page of the platform and to attract audience to the page. Boosted post can help better communication with the audience along with the increase in a greater number of messages, calls and texts. Boosted posts help for better advertisements of the product. For example, A Chocolate brand may use Boosted posts to gain audience as well as consumers. Boosted posts helps an adviser to be discovered among people, to establish a benchmark in the market and to gain more and more customers. It's a kind of marketing strategy used for publicity purpose.
Learn more about Communication at:
brainly.com/question/25645043
#SPJ4
Which best describes the types of indicators that the HDI measures?
O economic and industrial indicators
O infrastructure and social indicators
O social and economic indicators
O stability and social indicators
Answers
Answer:
O social and economic indicators
Explanation:
The Human Development Index (HDI) is a statistic used to measure a country's achievements in different aspects of its social and economic welfare. The united nations developed HDI to evaluate different dimensions of human development in a country. Dimensions of human development refer to people's health, educational level, and standards of living.
The HDI makes comparisons between countries by analyzing components such as average annual income and educational achievements.
Social and economic indicators is best describes the types of indicators that the HDI measures. The HDI analyzes factors such as average annual income and educational achievements to directly compare between countries.
What is HDI ?The Human Development Index is a metric that assesses a country's progress in various areas of social and economic development.
HDI was created by the United Nations to assess many aspects of a country's human development. Human development dimensions include people's health, educational attainment, and living conditions.
Thus, option C is correct.
For more information about HDI, click here:
https://brainly.com/question/11119149
#SPJ5
Gary participates in a group long-term care insurance program through his employer. The employer pays for a standard level of coverage for all employees, and Gary pays for an additional voluntary amount of coverage. In all, Gary's employer pays two thirds of the cost and Gary pays the remaining one third of the cost. If Gary makes a claim under this policy, what percentage of his benefits would be taxable based on the premium structure
Answers
Answer:
$0
Explanation:
When your employer pays for your health insurance policy, the benefits you receive are not taxed by the federal government. In most cases, when employees pay for some part of the health insurance plan, this payments are also excluded and not taxed by the federal government.
In this case, the benefits that Gary gets from his health insurance are not taxed by the federal government, only payments received for temporary disability or sickness are taxed since they replace your normal income.
Question 1
25 pts
Client 1: When I was three years old, I started making candy with my grandrłother.
I am now 10 and I want to sell chocolate candy with a farm theme to my friends and
family. My product ideas include Brown Cows (chocolate cows on a stick), Pigs in
Mud (marshmallow dipped in caramel, nuts and chocolate) and Farm Eggs (jelly
beans dipped in chocolate). The start-up expenses for my business are pretty small: a
few candy molds, candy and chocolate.) My parents have agreed to loan me the
money I will need and to let me work in the family kitchen. Schoolwork has to take
priority over business so if I have more sales than I can handle, I will probably ask
friends or my older brother to help. My brother is also pretty good at math and
computers so he could help me with keeping track of my expenses and advertising. I
really like the product development and packaging part of the business.
Answers
Answer:
This is an absolutely great idea. The only problem is where are you planning to hold your Business? Where are you selling these candies? How will you spread the word? What can you do to make sure people come back and want more of your product?
Explanation: I always wanted to sell candy when I was little but never pulled the trigger on it. For starters I think you should make the names a bit more of a friendly connotation so people don't assume the worst of your product. Your best bet to sell your items and candies would be at school. Now to be honest more kids are carrying money around now than they ever had when I was in elementary-middle school. This is your best bet. Make sure when you are selling your candies to not go in debt with your business, so many people I know tried this and failed because they put way more money then they were making because they thought it would pay off. Yes sometimes take the risk but almost always if your just trying to make a couple bucks, take it easy and sell for a reasonable price. If it costs about $10 to make "Brown Cows" for about 20 people then sell each brown cow for $1.25 per stick. If you have 20 people who are willing to buy you would make 15 dollars profit. Final thing is actually finding people to sell to. Most people go at these type of things alone which I think is a great idea. But if you want to get the word out even more tell a popular kid that you will pay him 5 for every 20 "Brown Cows" he sells. You can really pay him anything you want as long as your not going over your profit margin! Good luck and I would love to know how this goes!
The purpose of sending a thank-you letter after an interview is to _____. A. Increase name recognition b. Demonstrate good manners c. Reiterate interest in a position d. Reinforce qualifications e. All of the above Please select the best answer from the choices provided A B C D E.
Answers
Answer:
A
Explanation:
makes the most sense
The purpose of sending a thank-you letter after an interview is to Increase name recognition. Thus, option A is correct.
What is an interview?A meeting is an organized discussion where one member seeks clarification on pressing issues, and the other gives replies. In like manner of speech, "interview" alludes to a one-on-one discussion between a questioner and an interviewee.
A card to say thanks offers you a chance to repeat the focuses you made during your meeting. At any point left a meeting wishing you'd all the more emphatically stressed specific expertise or experience the business appeared to be searching.
A thank-you letter after a meeting allows you the opportunity to do precisely that. In particular thank, the questioner for their time and solicitation requires a meeting.
Therefore, option A is the correct option.
Learn more about interviews, here:
https://brainly.com/question/30054467
#SPJ2
T/F consultative-style selling, which emerged in the late 1960s and early 1970s, is an extension of the marketing concept.
Answers
True. Consultative-style selling, which emerged in the late 1960s and early 1970s, is an extension of the marketing concept.
What is consultative style selling ?The 1950s and 1960s saw the rise of the marketing concept, which is founded on the notion that a company's success depends on knowing what its customers want and need, then developing goods and services to suit those needs. This idea replaces traditional product-centered selling, where the emphasis is on the characteristics and benefits of a product or service, by placing the customer at the centre of a company's marketing initiatives.By going a step further, consultative-style selling expands on the marketing idea. Consultative selling entails actively engaging with the customer to understand their business and the issues they encounter before providing answers to those challenges.
This is different from simply understanding the customer's wants. This kind of selling is distinguished by This type of selling is characterized by a relationship-building approach that seeks to establish trust and mutual understanding between the seller and the customer.To know more about consultative style selling , check out :
https://brainly.com/question/13528768
#SPJ4
how+much+can+be+accumulated+for+retirement+if+$2000+is+deposited+annually,+beginning+one+year+from+today,+and+the+account+earns+7%+interest+compounded+annually+for+49+years?
Answers
The future value after 49 years of retirement is 55,059.86$.
The accumulation of retirement can be found by using the future value of the investment. The future value depends on the initial deposited money, interest rate, and total years. It can be written as
A = P((1+r) / n )^(n.t)
Where A is future value, P is initial deposited money, r is interest rate, n is periods and t is total time.
From the question above, the given parameters are
P = 2000$
r = 7% = 0.07
n = 1 year
t = 49 years
By substituting the given parameters, we get
A = P((1+r) / n )^(n.t)
A = 2000((1+0.07) / 1)^(1 . 49)
A = 55,059.86$
Find more on future value at: https://brainly.com/question/24703884
#SPJ4
How much life insurance do you need? Calculating needs - Part1 Larry and Ginny Stewart are 38 years old and have one daughter, age 9. Larry is the primary eamer, making $140,000 per year. Ginny does not currently work. The Stewarts have decided to use the needs analysis method to calculate the value of alife insurance policy that would provide for Ginny and their daughter in the event or Larry's death. Larry'and Ginny estimate that while their daughter is still living at home, monthly fiving expenses for Ginny and their child will be about s4,000 (in current dollars). After their daughter leaves for college in 9 years, Ginny will need a monthly income of $3,300 until she retires at age 65 . The 5 stewarts estimate Ginny's living expenses after 65 wil only be $2,900 a month. The life expectancy of a woman Ginny's age is 87 years, so the Stewart family calculatos that Ginny will spend about 22 years in retirement. Using this information, complete the first portion of the needs analysis worksheet to estimate their total ining expenses. Life Insurance Needs Analysis Worksheet Life Insurance Needs Analysis Worksheet In addition to these monthly expenses, other future outlays must be accounted for, Before they had a child, Ginny worked as a financial consultant, but her knowledge and skils are now somewhat outdated. Therefore, they include $40,000 for Ginny to go back to school. Additionally, Larry and Ginny want to create a college fund of $60,000 to fund their child's college education. They estimate that final expenses (funeral costs and estate taxes) will amount to $18,000. Finally, they have taken out a loan for a business venture of $32,200 and a credit card balance of $1,200, Because the Stewsirts are renters, they have no outstanding mortgage. Using this information, complete the next portion of Step i to determine the total financial resources neededi: The second half of the needs analysis worksheet is not shown on this page. To complete the worksheet and determine the value of the life insurance policy the Stewarts should purchase, they need to factor in additional Information. True on False: Larry's future salary (if he does not die) should be accounted for in the remaining portion of the form. True False
Answers
1. Calculate monthly expenses for each stage: $432,000, $712,800,$763,200.
2. Add up future outlays: $40,000 + $60,000 + $18,000 + $33,400 = $151,400
3. Calculate total financial resources needed: $432,000 + $712,800 + $763,200 + $151,400 = $2,059,400
4. Larry's future salary should not be included, as it is not a financial resource if he dies.
- Daughter at home: $4,000 x 12 months x 9 years = $432,000
- Until Ginny retires: $3,300 x 12 months x (65-47) years = $712,800
- 22 years of retirement: $2,900 x 12 months x 22 years = $763,200
To calculate how much life insurance Larry and Ginny Stewart need, they should consider their living expenses, future outlays, and financial resources.
Their total living expenses are $4,000 per month while their daughter is at home, $3,300 per month until Ginny retires at 65, and $2,900 per month for 22 years of retirement.
Other future outlays include $40,000 for Ginny's education, $60,000 for their daughter's college fund, $18,000 for final expenses, and a total debt of $33,400. Larry's future salary should not be accounted for in this calculation.
To know more about total debt click on below link:
https://brainly.com/question/27817131#
#SPJ11
If a person wants to work from home in the Business, Management and Administrative careers, what is required?
a cubicle to keep the person on task
a private office to protect confidential information
proper technology to keep the person connected
proper travel arrangements to meet with customers
Answers
Answer:
proper technology to keep the person connected
Answer:
proper technology to keep the person connected
Explanation:
A person in the Business, Management, and Administrative career have a desk and computer in the office. For them to work efficiently, they will need to have a similar setting at home. In the office, they are most likely connected to the company's private network via the intranet.
To work from home efficiently, the person will need a strong and reliable technology to stay in touch with the official business. He or she will require access to the office files and programs while at home. Technology will be required to facilitate the seamless flow of information between him, his colleagues, and supervisors.
John Taxpayer had a gross income of $2823,08 and $892.34 in deductions, How
much would John's paycheck be this month?
$1,930.74
$1,900.00
$2,823.08
$3,715,42
Answers
Answer:
$1,930.74
Explanation:
John's paycheck will be the diffidence between the gross income and deductions,
I.e., Paycheck = gross income - deductions
= $2,823. 08 - $892.34
= $1,930.74
What role do special government agencies play in protecting buyers? Check all that apply.
Answers
Answer:
Agencies create regulations to ensure safe products.
Agencies provide information about products and services.
Agencies collect buyers fraud complaints.
Special Government agencies make companies and businesses compete, by protecting the customers as well.
Explanation:
Answer:
A: They create regulations to ensure safe products
E: They provide information about products
F: They collect customer fraud complaints
Explanation:
on edge Good Luck!!!
Skysong Company is considering two capital investment proposals. Estimates regarding each project are provided below: Project Soup Project Nuts Initial investment $400000 $600000 Annual net income 18000 34000 Net annual cash inflow 96000 119000 Estimated useful life 5 years 6 years Salvage value 0 0 The company requires a 10% rate of return on all new investments. Present Value of an Annuity of 1 Periods 9% 10% 11% 12% 5 3.89 3.791 3.696 3.605 6 4.486 4.355 4.231 4.111 The annual rate of return for Project Soup is
Answers
Answer:
20%
Explanation:
Calculation to determine The annual rate of return for Project Soup is
Annual rate of return = [(Current Value of Investment - Initial Investment for one year )/Initial Investment for one year )]*100
Let plug in the formula
Annual rate of return= (($96000 - $80000) / $80000) * 100
Annual rate of return= ($16000 / $80000) *100
Annual rate of return= 20%
Workings:
Calculation to determine the Initial Investment for one year
Initial Investment for one year = $400000 / 5 year
Initial Investment for one year = $80000
Therefore The annual rate of return for Project Soup is 20%
If the present value of an ordinary annuity that pays $250 each year for four years is $839.21, what is the annual discount rate?
Answers
To find the annual discount rate in this problem, we can use the present value formula for an ordinary annuity. The formula is: PV = PMT * [(1 - (1 + r)^-n) / r]
Substituting these values into the formula, we get: 839.21 = 250 * [(1 - (1 + r)^-4) / r]
To solve for r, we can use trial and error or a numerical method like Newton's method. However, in this case, we can solve it algebraically. First, let's simplify the equation by multiplying both sides by r: 839.21 * r = 250 * (1 - (1 + r)^-4)
Now, expand the right side: 839.21 * r = 250 - 250 * (1 + r)^-4
Move all terms to one side of the equation: 0 = 250 - 839.21 * r + 250 * (1 + r)^-4
Simplify further: 0 = 250 * (1 + r)^-4 - 839.21 * r + 250
To solve for r, we can use a calculator or an online equation solver. The solution to this equation is approximately 0.1099, or 10.99%.
Therefore, the annual discount rate in this case is approximately 10.99%.
To know more about discount visit:
brainly.com/question/33691776
#SPJ11
Nora has heard that opening a lot of credit card accounts is a good way to build credit. She currently has five cards, but is sometimes forgetful in paying her bills on time and usually has a balance on each card. Her favourite store is offering a $50 coupon on her next purchase, with the promise of more coupons in the future, if she opens a credit card. She decides to open the store credit card to get the discounts.
How would Nora use the decision making steps in this scenario?
Is this a good or bad debt move? Why?
Answers
If a+b =1, and c = 1/b, how much is c if a=0.80?Group of answer choicesThe answer cannot be calculated because there is insufficient information.a)0.20b)1.25c)5
Answers
If a+b =1, and c = 1/b, the value of c if a=0.80 so the answer is c.5.
To calculate a + b = 1, so we can substitute 0.80 for a: 0.80 + b = 1
Then Subtract 0.80 from both sides to isolate b: b = 1 - 0.80 = 0.20
We are also given that c = 1/b, so now we can substitute 0.20 for b: c = 1/0.20 = 1/0.20 = 5
So, the value of c is 5.
The replacement operation in algebra can be used in a variety of situations involving formal objects that contain symbols; the procedure entails methodically replacing instances of a certain symbol with a particular value.
Therefore the final answer is 5.
To know more about maths here
https://brainly.com/question/24600056
#SPJ4
You are on the team of executives at Star Bank. You have been meeting as a team to discuss the future of the bank, including big picture goals of how to grow the company. What type of planning is this?
A. operational
B. functional
C. strategic
D. consumer
SOMEONE PLEASE HELP!!!!!
Answers
Strategic planning is the type of planning used by team of Star bank.
What is strategic planning?Strategic planning is a type of planning that is channeled towards a purpose.
Companies make use of strategic planning to help focus on a particular goal or aim
Therefore, Strategic planning is the type of planning used by team of Star bank.
Learn more on strategic planning below
https://brainly.com/question/17924318
#SPJ1
can anybody help me please i will mark brainlyest
Answers
and electrical light
Explanation:
telephone: it allowed for instant
communication, communication by voice,
and it paved the way for future inovations
in telephone technology.
engine: it was powered by gas and air,
which made it impractical for widespread
public use.
light: Electric lights allowed factories to stay
open longer and produce more goods.
which of the following is not a characteristic of a money market instrument? multiple choice marketability maturity greater than 1 year liquidity low risk
Answers
The characteristic that is NOT associated with a money market instrument is maturity greater than 1 year.
Money market instruments are short-term debt securities that have a maturity of less than one year. These instruments are highly liquid, which means they can be easily bought or sold in the market. They are considered low-risk investments because they are issued by entities with high creditworthiness. Moreover, they have a high level of marketability, which means they can be traded in large volumes without significantly affecting their prices. Thus, investors who are looking for a safe place to park their cash for a short period of time often choose money market instruments.
To know more about maturity visit :-
https://brainly.com/question/1885754
#SPJ11
Which statement is true?
online credit is more expensive than bank credit
online credit is less expensive than bank credit
online credit and bank credit are equally expensive
online credit is harder to obtain than bank credit
Answers
Answer:
online credit is less expensive than bank credit
Explanation:
Online lenders are likely to charge lower rates than banks due to the differences in operating expenses. Online lenders do not incur the cost of operating from a physical building, such as rent and maintenance. They do not have high employee cost as compared to banks. Due to these reasons, online lenders charge lower fees and lower interest rates.
Sometimes online loans appear expensive, but it's because they are unsecured loans. A close comparison between different types of loans will show online lenders offer cheaper loans.
an organization that is a for-profit entity can partially qualify for exempt status. a. true b. false
Answers
The statement is Not true. For-profit organizations cannot be partially exempt.
Tax-exempt status is awarded to organizations that meet certain criteria and are excluded from income tax. These exemptions normally apply to nonprofit organizations organized and operated exclusively for charitable, educational, religious, scientific, or other tax code-specified objectives. For-profit companies aim to make money for their shareholders. They make money and pay income and other company taxes. Social enterprises and Benefit Corporations (B Corps) that combine profit-making with a social or environmental goal are not tax-exempt. They're still for-profit and taxed. In conclusion, only nonprofit organizations that meet tax law requirements can qualify for exempt status.
To know more about income tax
https://brainly.com/question/30157668
#SPJ11
Create a Business Model Canvas for Innovative Marketing
Agency
(Marketing agency creates ads using holograms)
Answers
The Business Model Canvas (BMC) is a visual representation of the business model of an organization. BMC is a strategic management template that can be used to develop new business models or evaluate existing ones. BMC allows a company to describe, design, and evaluate a new or existing business model effectively. The following is a BMC for an innovative marketing agency that creates advertisements using holograms.
Key Partners
- Partners who supply hologram-related technologies
- Clients
- Marketing firms
- Advertisers
Key Activities
- Design and produce hologram-related advertisements
- Develop marketing campaigns
- Create market reports
- Develop and deliver new products/services
Value Proposition
- Provides innovative advertisement solutions using hologram technology
- Innovative advertising campaign development and implementation
- Customized market reports
- Provides a competitive advantage to clients
Customer Relationships
- Personalized advertising solutions
- Feedback and review
- Dedicated account manager
Customer Segments
- Advertisers
- Marketing firms
- Companies and organizations
- Small business owners
Key Resources
- Hologram-related technologies
- Skilled human resources
- Customer database
- Marketing and advertisement expertise
Channels
- Online advertisements
- Social media advertising
- Printed advertisements
- Events and conferences
- Exhibitions
Cost Structure
- Salaries and wages of employees
- Technology and equipment
- Research and development
- Office space
- Advertising and marketing expenses
Revenue Streams
- Service fees
- Advertising and marketing fees
- Commissions from partner sales
- Royalties from the use of hologram technology.
To know more about BMC visit
https://brainly.com/question/33247139
#SPJ11
90 + 150 is what
a 140
b 240
c 350
d150
Answers
Answer:
B 240
Explanation:
Which of the following is not one of the reasons for financial failure? A. Ignorance of current tax laws B. Failure to establish definite goals C. Procrastination D. Investments in mutual funds
Answers
Ignorance and procrastination of anything could lead to failure.
Investments in mutual funds is not one of the reasons for financial failure. Hence, option D is correct.
What is Investments in mutual funds?A mutual fund is a business that collects money from many different sources and uses it to buy securities like stocks, bonds, and short-term loans. All of a mutual fund's holdings are referred to as its portfolio. Investors buy shares of mutual funds.
Mutual funds are typically seen as safe investments with little risk and a great method for investors to diversify. When it comes to fees, a mutual fund might not always be the greatest choice for a market participant.
Although there are many different types of mutual funds, most of them fall into one of four basic categories: stock funds, money market funds, bond funds, and target-date funds.
Thus, option D is correct.
For more information about Investments in mutual funds, click here:
https://brainly.com/question/2357375
#SPJ2
10. All items are provided under one roof in
retailing.
Answers
In 2022, miranda records net earnings from self-employment of $168,500. She has no other income. Determine the amount of miranda's self-employment tax and her agi income tax deduction
Answers
Miranda's self-employment tax and her AGI income tax deduction are:
Self - employment tax - $22,740.68AGI Income tax - $11,370.34How to find the self - employment tax?First, find the amount of self - employment earnings that are subject to taxation which is:
= Net earnings x 92.35%
= 168, 500 x 92.35%
= $155, 609.75
The maximum social security tax level that can be taxed is $147,000 in 2022 so the social security tax to Miranda is:
= $147,000 x 12.4%
= $18,228
The Medicare tax is on all the taxable income and so is:
= 2.9% x 155, 609.75
= $4, 512.68
Total self - employment tax is:
= 18, 228 + 4, 512.68
= $22,740.68
The AGI income tax deduction is 50% of income tax for those who are self - employed.
Miranda's AGI income tax deduction is:
= 22,740.68 x 0.5
= $11,370.34
Find out more on self - employment tax at https://brainly.com/question/28443750
#SPJ1
Explain what certificates of deposit (CDs) and money market mutual funds are.
Answers
Explanation:
certificate of deposit CDs are saving accounts that earns interest and it's insured by the federal governmentit.It has higher rates and give no access to your money until a term ends. Funds get locked up for a set period of months or years, and withdrawing early typically results in a penalty, such as several months to a year’s worth of interest. Most often, CD rates are fixed.
Money market accounts are also savings account insured by the federal government they usually offer some access and rates comparable to regular savings accounts. You can withdraw money six times a month. They generally have larger minimum balances and sometimes offer checks. Money market account rates are subject to change over time.
What are the two factors used to calculate productivity?
A. Goods produced and number of customers
B. Resources invested and goods lost
C. Goods produced and employees hired
D. Goods produced and resources invested
Answers
Goods produced and resources invested re the two factors used to calculate productivity.
How productivity is measured?Productivity is measured from different factors in the organization like the profit generate from the sales, number of customer increases, the amount of money invested in the company, the goods that are consumed of sell within span of time and others.
Thus, option D is correct.
For more details about productivity is measured, click here:
https://brainly.com/question/12693045
#SPJ2
Answer:
Goods produced and resources invested
Explanation:
1} When making decisions regarding the use of resources, options NOT chosen are known as which of the following?
A} The economic allowance for the option chosen
B} The chosen option’s tangible adversary
C} The opportunity cost of the option chosen
D} The chosen option’s conscious rejection
Answers
Answer: The answer is C opportunity cost of the option chosen
Explanation:
Human want are numerous while the resources to satisfy them are limited in supply. Because of the scarcity of resources this informed the use of scale of preference to rank our want in their order of preference. Then arise the concept of opportunity cost ,opportunity cost is the value of benefit sacrifice in favour of an alternative course of action in the sense that the acceptance of one option will automatically lead to the rejection of the second option. It is the cost of doing anything that could have been obtained if that particular decisions has not been taken. The return forgone from its use is the opportunity cost.