Glossary

Return on Investment (ROI) is a financial metric used to evaluate the efficiency of an investment or to compare the performance of different investments.

It measures the gain or loss generated by an investment relative to the amount invested. ROI is calculated by dividing the net profit from an investment by the initial cost of the investment and then multiplying the result by 100 to express it as a percentage. 💰📈

For example, if you invest $10,000 in a stock and sell it for $12,000, your net profit is $2,000. The ROI would be 20% ($2,000 / $10,000 x 100).

Fun fact: The concept of ROI can be traced back to the early 20th century when it was used by the DuPont Corporation as a way to analyse the profitability of their various businesses. It has since become a widely used tool in the world of finance! 🌐📚