Return on Investment: Definition, Formula & Example

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What does ROI measure?

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1. If the ROI formula yields a negative number, what does this mean?

2. You just purchased a house for $100,000 at a local county auction. You spent $50,000 to renovate the house and netted $160,000 after sale expenses. What is your ROI?

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About This Quiz & Worksheet

Looking at whether your decision to buy was a good one or not, this quiz and corresponding worksheet will help you gauge your knowledge of the return on investment (ROI) formula. You'll be asked what ROI measures, and you'll need to understand what happens if the ROI formula yields a negative number.

Quiz & Worksheet Goals

Use this printable worksheet and quiz to review:

  • What ROI measures
  • When the ROI yields a negative number
  • Calculating ROI

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify that you can read information regarding what it means when the ROI yields a negative number and interpret it correctly
  • Reading comprehension - ensure that you draw the most important information from the related ROI lesson
  • Problem solving - use acquired knowledge to solve ROI problems

Additional Learning

To learn more about whether purchasing those penny stocks was a good idea, review the corresponding lesson called Return on Investment: Definition, Formula & Example. This lesson will help you:

  • Understand what the return of investment is
  • Identify the basic formula for ROI
  • Explain how net profit relates to total investment
  • Describe how to calculate the ROI on a purchase
  • Appreciate how shareholders can evaluate their stocks
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