What is ROI?

Return on investment (ROI) is a measure of the profitability of an investment, calculated by dividing the investment's gain or loss by its cost. ROI is often expressed as a percentage, and is used to evaluate the efficiency of an investment or to compare the profitability of different investments.

For example, if an investor buys a stock for $100 and sells it for $150, the ROI on the investment would be 50%. This can be calculated as follows:

ROI = (Gain or loss / Cost) x 100

= (150 - 100) / 100 x 100

= 50%

ROI can be a useful metric for evaluating the performance of an investment, but it should be used in conjunction with other metrics and considered in the context of an investor's overall portfolio and financial goals.