Return on Investment (ROI) is a metric used to evaluate the efficiency of a particular investment or compare the performance of multiple investments. It is calculated as a percentage of profits relative to the initial costs of the investment.
Example: If you invest $100,000 and earn $120,000 in returns, your ROI is 20%.
This metric helps make informed investment decisions by assessing profitability. Remember, higher returns often come with greater risks, so finding a balance between risk and return is crucial.
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