An investment's return is a profit in finance. Any change in the investment's value as well as any cash flows that the investor gets from the investment are included.
What rate of return did Julie earn on her investment ?
a) rate of return = dividend/price of stock (Po)
= 48.50/925
= 5%
b) dividend yield = dividend/current price (P1)
= 48.50/967
= 4.81%
c) capital gains yield = P1-Po/Po = 967 - 925 /925 = 42/925 = 4%
The ratio of net income (during a period of time) to investment is known as return on investment (ROI) or return on costs (ROC) (costs resulting from an investment of some resources at a point in time). A high ROI indicates that the returns on the investment outweigh the costs. ROI is used as a performance metric to assess an investment's effectiveness or to compare the effectiveness of multiple distinct investments. [1] It is a method of connecting earnings to capital invested in terms of economics.
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