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  2. A return is the change in price of an asset, investment, or project over time, which may be represented in terms of price change or percentage change. A positive return represents a profit, while a negative return marks a loss.
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    What is return on investment?Return on investment is a metric that investors often use to evaluate the profitability of an investment or to compare returns across a number of investments. It is expressed as a percentage.
    What is a return based on?A return can be expressed nominally as the change in dollar value of an investment over time. A return can also be expressed as a percentage derived from the ratio of profit to investment. Returns can also be presented as net results (after fees, taxes, and inflation) or gross returns that do not account for anything but the price change.
    Why is return on investment important?Return on investment helps investors to determine which investment opportunities are most preferable or attractive. For example, let us consider Investment A and Investment B, each with a cost of $100. These two investments are risk-free (cash flows are guaranteed) and the cash flows are $500 for Investment A and $400 for Investment B next year.
    How is a return calculated?A return is often calculated as a percentage or ratio of the original investment, so that managers can measure and compare how well their investments are performing. Amount of return depends on a lot of different things, but the main driving force is risk. Typically high-risk investments reap a higher rate of return than low risk investments.
     
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    WebSep 28, 2022 · Learn how to calculate and use ROI to evaluate the profitability of an investment or a business endeavor. ROI compares how much you paid for an investment to how much you earned as a

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