Which term is defined as your profit divided by your original investment, expressed as a percent?

• A. IPO (Initial Public Offering)
• B. Discount Broker
• C. ROI (Return on Investment)
• D. Active Investing

Answer: (C)

Return on Investment (ROI) shows how much money you make from an investment relative to what you put in, shown as a percentage. It’s calculated as ROI = (profit / original investment) × 100%, where profit is the net gain after costs. For example, if you invest $2,000 and later earn $2,500, the profit is $500, so ROI = (500 / 2000) × 100% = 25%. This metric helps you compare different investments regardless of their dollar size, though it doesn’t by itself account for how long you held the investment unless you specify a time period.

Other terms aren’t about measuring profitability in that same way: an IPO is the first public sale of a company’s stock, a discount broker is a low-fee brokerage, and active investing describes a strategy of frequent trading to try to beat the market.