What term is used for the loss associated with choosing one investment over another?

The correct term for the loss associated with choosing one investment over another is opportunity cost. Opportunity cost refers to the value of the next best alternative that is foregone when a decision is made. In the context of investments, when an individual or business selects one investment option, they are effectively giving up the potential gains or benefits they could have received from the alternative option not chosen.

This concept is crucial in decision-making, particularly in finance and economics, as it highlights the trade-offs involved in any choice. Understanding opportunity cost helps investors evaluate the true cost of their investment decisions and encourages more informed choices by considering not just the direct costs, but also the potential benefits they are forgoing.

The other terms do not accurately describe this concept. For instance, capital gain refers to the profit made from selling an asset for more than its purchase price, risk assessment relates to evaluating the potential risks involved in an investment, and market variance refers to the fluctuations in price in the market, which does not encompass opportunity cost.