ROI stands for which of the following?

• A. Return on investment
• B. Rate of investment
• C. Revenue on investment
• D. Return on income

Answer: (A)

ROI stands for Return on Investment, a measure of profitability relative to the cost of an investment. It shows how much profit you earn for each dollar invested and is typically expressed as a percentage. You compute it by taking the net gain from the investment (what you earned minus what you spent) and dividing by the cost, then multiplying by 100. For example, investing $1,000 and realizing a net gain of $300 results in an ROI of 300/1000 = 30%. This metric helps you compare different options to see which provides the best efficiency with your money. It’s not the rate of investment, not revenue on investment, and not return on income, and it doesn’t capture the time value of money unless you adjust for time.