Duncan Jones has made a windfall gain of $50,000. He has come up with three options of

Question:

Duncan Jones has made a windfall gain of $50,000. He has come up with three options of investing the money. First, he could dispose of his bachelor pad and buy a house in a nice neighbourhood. Second, he could invest the money in carefully chosen and shares, which are expected to increase in value by 30% per year. This, however, is a risky option. Third, he could put his money into a fixed deposit arrangement with a bank and earn 8.5% per year. There is little risk involved in taking the third option.
a. If he decides to purchase a house, what is the of this choice? Explain your reasoning.
b. If he invests in the stock market, what is the of this choice? Explain your reasoning.
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...