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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.
    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.
    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.
    What is a good return on investment?And, as with all investments, historical performance is no guarantee of future success. What Is a Good ROI? According to conventional wisdom, an annual ROI of approximately 7% or greater is considered a good ROI for an investment in stocks. This is also about the average annual return of the S&P 500, accounting for inflation.
     
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