Opportunity cost represents the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. It mainly concerns the analysis of trade-offs and ensuring that the benefits of a pursued action or investment outweigh its associated costs.
The risk-free rate is the interest rate on the safest investments, typically represented by short-term government securities like U.S. Treasury bills. It is a crucial component in finance for calculating other metrics and making investment decisions.
A tax bracket refers to the range of income subject to a certain marginal tax rate. It defines the percentage of each additional dollar in income required to be paid as income taxes.
