Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments.
 | | Term of the Day | Words to Know | | |  | | Return on Investment (ROI) | | Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio. | | Read More » | | Related to "Return on Investment (ROI)" | | | | Rate of Return | | A rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment's cost. | | Read More » | | | Net Present Value | | Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. | | Read More » | | | Real Rate of Return | | A real rate of return is the annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms, keeping the purchasing power constant over time. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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