Return on Investment

Return on Investment

Return on investment, essentially how profitable an investment has been, is probably the most fundamental measurement an investor needs to make. The gross return (i.e. excluding brokerage fees and commissions and taxes etc) is simply calculated as a percentage gain or loss – the current value of the investment minus the entry cost – as a percentage of the entry cost. Investors and analysts will calculate returns on an annual basis in order to equalise comparisons between investments with different time horizons.

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