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Revision as of 18:52, 11 December 2001
The return on investment is the ratio of the amount gained (taken as positive), or lost (taken as negative), relative to the basis. The basis is the amount risked ("invested") to obtain that gain or loss, and is always positive.
In mathematical terms, the ROI is (Vf - Vb) / Vb, where Vf is the final value and Vb is the basis.
Interestingly, to compensate for a negative ROI one needs a positive ROI that is higher in magnitude. For example, to recoup a 50% loss one needs to realize a 100% gain.