ROI is a useful measure for comparing different investments, as it allows you to see which one is likely to provide the greatest return for a given level of risk.
Return on Investment (ROI) is a financial measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. It is calculated by dividing the net profit or benefit of an investment by the initial cost of the investment, and expressing the result as a percentage or a ratio. The higher the ROI, the better the investment is considered to be.
For example, if you invest $100 in a stock and it appreciates in value to $110, your ROI would be 10%. This means that for every dollar you invested, you received $0.10 in return. On the other hand, if the stock only appreciates in value to $105, your ROI would be 5%.
ROI is a useful measure for comparing different investments, as it allows you to see which one is likely to provide the greatest return for a given level of risk. It is important to note that ROI does not take into account the time value of money, so it is generally more useful for comparing investments that are held for similar periods of time.
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