Introduction

The rate of return is the net profit or loss on an investment over a specific period of time,
expressed as a percentage of the initial cost of the investment. The time period is usually
one year, in which case it is called an annual return. Investment gains are defined as the
income received plus the capital gain realized from the sale of the investment. The rate of
return is sometimes called return on investment or ROI. In finance, yield is a profit on an
investment. It includes any change in the value of the investment and/or the cash flows
that the investor receives from the investment, such as interest payments or dividends. In
this research report the usefulness of the rate of return of an investment will be explained.

Prepare a research report in which you explain the usefulness (what it is for) of the rate of
return of an investment, you can include examples!

A loss rather than a profit is described as a negative return, assuming the amount invested
is greater than zero.

The rate of return can be applied to any type of investment, from real estate to bonds,
stocks and art, as long as the asset purchased at a given time produces cash flow in the
future.

Research development

Rates of return are useful for making investment decisions. For nominal risk investments, such as
savings accounts, the investor considers the effect of reinvesting. Thus, it increases savings
balances over time to project expected earnings in the future.

For investments where capital is at risk, such as stocks and home purchases, the investor also
takes into account the effects of price volatility and the risk of loss.

The indicators that financial analysts use to compare a company's performance over time, or to
compare performance between companies, are return on investment, return on equity, and
return on assets.

In the capital budgeting process, companies compare the rates of return of different projects to
decide which projects to pursue to maximize the company's return.

Return on investment measures the amount gained or lost from an investment as a

proportion of the initial investment in percentage terms. In detail, the return on
investment is the percentage of the initial fee that represents the change in the value of
the fee, during a period, plus the dividends collected during it. It is a very useful tool to
know how profitable an investment would be. The higher the return on the investment,
the greater the economic benefits it should represent for you as an investor, which is why
said investment would be more convenient for you.
What is return on investment?

The return on investment or return on investment, also known as ROI, Return On Investment; It is
a financial index or indicator responsible for measuring the profitability of an investment, that is,
the profits or profits expected to be obtained from an investment.

Therefore, the higher the yield, the greater the economic benefits as an investor. This index
indicates the percentage of the investment that has been recovered or earned and is expressed as
a percentage of the initial investment. For example, an ROI of 10% indicates that we will recover
10% of the investment made.

Conclusion

Knowing the rate of return of an investment will allow you to know the profits that can be
received for each peso invested and in this way compare between different assets that are
being evaluated to make the money profitable. This will allow you to identify if the
investment is profitable, how much you will get for the money invested and if it is an
attractive investment compared to other alternatives.

The rate of return can be used to calculate the profitability obtained on an investment, that
is, what a financial asset, a product has allowed you to earn, or the profitability that a
company has provided in a given period of time. But it is generally used to know in
advance what profitability can be gained with a project, the creation of a company, the
launch of a product or a financial asset.