ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Return on investment (ROI) is calculated by dividing the profit earned on an investment by the cost of that investment. For instance, an investment with a profit of $100 and a cost of $100 would have an ROI of 1, or 100% when expressed as a percentage.

Detailed explanation-2: -Understanding Total Return Total return is expressed as a percentage of the amount invested. For example, a total return of 20% means the security increased by 20% of its original value due to a price increase, distribution of dividends (if a stock), coupons (if a bond), or capital gains (if a fund).

Detailed explanation-3: -The total return of an investment includes both the capital gains and the income that it generates. As a strategy, the total return approach involves producing the highest possible return on investment. To put it simply, total return = (ending value – starting value) + earnings in that period.

Detailed explanation-4: -Return on Investment (ROI) A calculation of the monetary value of an investment versus its cost. The ROI formula is: (profit minus cost) / cost. If you made $10, 000 from a $1, 000 effort, your return on investment (ROI) would be 0.9, or 90%.

Detailed explanation-5: -Take the selling price and subtract the initial purchase price. The result is the gain or loss. Take the gain or loss from the investment and divide it by the original amount or purchase price of the investment. Finally, multiply the result by 100 to arrive at the percentage change in the investment.