Find opportunity cost when investment of ₹50,000 in the stock market,by way of withdrawal of demand deposit causes a loss of interest income of ₹5,000 per annum. Give logical reasoning.
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Demand deposit carries a fixed rate of return on investment, and share market is volatile and the investment in share market does not assure any fixed rate of interest and even recovery of the principal amount invested initially.
Withdrawal from demand deposits to invest in share market will, therefore, carry an opportunity cost of
Investment + Return on investment = 50000 + 5000 = Rs.55000
Explanation:
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