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( Return on investment)
In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction. ROI does not indicate how long an investment is held. However, ROI is most often stated as an annual or annualized rate of return, and it is most often stated for a calendar or fiscal year. An investment that is held longer has an annualized ROI that is closer to zero. In this article, "ROI" indicates an annual or annualized rate of return, unless otherwise noted. ROI can be used to compare returns on investments where the moneys gained or lost are not easily compared using monetary values. For instance, a $1,000 investment that earns $50 in interest generates more cash than a $100 investment that earns $20 in interest, but the $100 investment earns a higher return on investment. The rate of return can take on any value greater than or equal to -100% -- a positive value corresponds to capital growth, a negative value corresponds to capital decay, and a value of 0% corresponds to no change.
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