Glossary Terms

Return on Investment (ROI)

Return on investment (ROI) measures the gains received from an investment compared to that investment’s cost. A high ROI indicates favorable benefit to the investor.

Return on investment (ROI) measures the gains received from an investment compared to that investment’s cost. A high ROI indicates favorable benefit to the investor.

ROI is usually expressed by a ratio or percentage that is calculated by subtracting the cost of an investment from the gain from that investment, divided by the cost of the investment. Quantifying ROI in this way lets investors compare potential and existing investments.