ML FBLA Financial Literacy - Return on Investment

What does ROI stand for?

• Return on Investment

• Rate of Investment

• Return on Income

• Rate of Interest

What is the purpose of calculating ROI?

• To determine how much money you owe

• To measure the profit or loss from an investment

• To calculate your credit score

• To find out how much you should save

How is ROI calculated?

• (Investment gain – Investment cost) ÷ Investment cost

• (Investment cost – Investment gain) ÷ Investment cost

• Investment gain × Investment cost

• (Investment gain ÷ Investment cost) × 100

If you invest $100 in a stock and later sell it for $120, what is your ROI?

• 10%

• 20%

• 50%

• 25%

What does a negative ROI indicate?

• You made a profit on your investment

• You have no profit or loss from the investment

• You lost money on your investment

• You should invest more money

If you earn $200 from an investment and your initial investment was $1,000, what is your ROI?

• 10%

• 15%

• 20%

• 30%

What type of investments can ROI be used to evaluate?

• Only stocks and bonds

• Only real estate

• Any type of investment (stocks, real estate, business, etc.)

• Only savings accounts

If you invest $500 in a savings account that earns $25 in interest over one year, what is the ROI?

• 5%

• 10%

• 25%

• 50%

Why is ROI important for investors?

• It helps them decide where to spend money on entertainment

• It helps them compare the profitability of different investments

• It tells them how much tax they will pay

• It tells them the best time to sell an investment

What is the formula for calculating ROI as a percentage?

• (Investment gain ÷ Investment cost)

• (Investment gain ÷ Investment cost) × 100

• (Investment cost ÷ Investment gain) × 100

• (Investment cost – Investment gain) × 100