Return on investment - absolute return

return on investment - absolute return

Level - BASIC

http://www.youtube.com/embed/qsK8Z6iiA2o UTI "When investments with different amounts are to be compared, it may be misleading to compute return as the difference between sale price and purchase price. It is better to compute simple or absolute return, which computes return as a percentage. This video is a part of the 'Money Math' series and shows how to compute absolute return."

AUTHOR(S): Arti Bhargava

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Return on Investment - Absolute Return

 http://www.youtube.com/embed/qsK8Z6iiA2o UTI "When investments with different amounts are to be compared, it may be misleading to compute return as the difference between sale price and purchase price. It is better to compute simple or absolute return, which computes return as a percentage.

This video is a part of the 'Money Math' series and shows how to compute absolute return."

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    1.Why is absolute returns in percent terms used to compare different investments?



  • As it tells us which invesment has a higher Return on Investment than the other
  • As it tells us how much each investment has made in rupee terms
  • As it tells us how each investment will perform if the same amount is invested
  • 2.Invesment A: Purchase price Rs 5000 Sold at Rs. 7500. Invesment B: Purchase price 12000 Sold at Rs. 18000. Which of the Invesment was a better bet for the investor?



  • Investment A
  • Both are equal
  • Invesment B
  • 3.Investment I earned Rs.5000 over one year, and investment II earned Rs.10,000 in the same period. Which investment has earned a higher return?



  • Investment I
  • Investment II
  • Cannot say, since we don?t know the initial outlay
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