### How do you calculate return on an investment?

A Return on Investment (ROI) is calculated to measure the performance of one investment relative to another. ROI is expressed as a percentage and is based on returns over an associated time period, usually one year. For example, a 25 percent annual ROI means that a $100 investment would return $25 in one year. Thus, after one year, the total investment becomes $125. Write down the amount of your total investment, including fees and expenses…

### The concepts of return on investment and risks?

Investment return and risk are fundamental to understanding market behavior. Return on investment is essentially profit made by an investor. Profits and losses must be analyzed carefully, as simple percentage comparisons give misleading answers. Risk refers to the probability of depreciation as well as its potential magnitude, which can exceed original invested amount. Risk and return on investment are directly correlated; higher risk begets a smaller chance of high return and vice versa.

### How do you calculate ROI?

Definition of 'Return On Investment - ROI' A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio. The return on investment formula:

### The higher the risk the higher the return?

Risk means you have the possibility of losing some, or even all, of our original investment. High levels of uncertainty (high risk) are associated with high potential returns. The risk/return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return. This is demonstrated graphically in the chart below. A higher standard deviation means a higher risk and higher possible return. An investor still faces substantially greater risk and…

### Can you give me an example of return on investment?

Return on investment, or ROI, is almost always focused on financial returns that result from an investment. Returns are classified as tangible when there is a direct gain/loss or as intangible when the return is a soft gain/loss. This can be an investment like purchasing a stock or a home which increasing in value or pays a dividend or provides rental income. It can also be a business return on an investment in a new…

### How do financial decisions involve risk return trade off?

The principle that potential return rises with an increase in risk. Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns. According to the risk-return tradeoff, invested money can render higher profits only if it is subject to the possibility of being lost.-- Raju R akki

### How do you calculate Return On Investment - ROI?

To calculate ROI, the benefit (or return of money or income gained) of an investment is divided by the cost of the investment. ROI is usually shown as a percentage. This formula can also be used to suit a number of different situations. Here is the formula for ROI: (Income from Investment - Cost of Investment) / Total Cost of Investment = ROI