NORMAL PROFIT Definition

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NORMAL PROFIT is the opportunity cost of using entrepreneurial abilities in the production of a good, or the profit that could have been received by entrepreneurship in another business venture. Like the opportunity costs of other resources, normal profit is deducted from revenue to determine economic profit. It is, however, never included as an accounting cost when accounting profit is computed.

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NET OPERATING INCOME (NOI) is income after deducting for operating expenses but before deducting for income taxes and interest.

CALL RISK is the risk that a bond will be prepaid before its maturity date, causing the investor to lose future interest payments, which may be at interest rates well above current market rates.

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