What's the application of ROI in real-world business? What's the application of ROI in the stock...

What's the application of ROI in real-world business?
What's the application of ROI in the stock valuation?

Solutions

Expert Solution

· ROI stands for return on investment and the major application for the ROI in the real-world scenario, the investors uses this to compare different investment. Let’s say there are 3 investment with similar risk profile but one of them has the highest ROI so the investors will choose the investment with the highest ROI. Similarly, ROI is a measure used to compare different business prospect. ROI can also be sued to compare it against what the investor required rate of return is against the expected ROI.

· The ROI acts as a required rate in the stock valuation. Most investors have pre-determined expected rate of return based on their expectation or industry average, they expect that much return to achieve, this act as a required rate in the calculation of the price of the stock. Higher required rate means the price of the stock would be lower, the investor is valuing the stock lower. This can also be looked from the perspective of risk. High expected ROI means the risk is higher in the business and the investor is expecting to be compensated for that.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Outline one real-world business use case of blockchain detail the following: What is the application use...

Outline one real-world business use case of blockchain detail the following: What is the application use case? What type of blockchain system is this (public, private etc.) How is the application better than the existing environment? What are the special concerns that must be kept in mind for this application?

1 a) Imagine a real-world example (application, situation, or business) that can benefit from Data Analytics....

1 a) Imagine a real-world example (application, situation, or business) that can benefit from Data Analytics. Discuss what sorts of data can be available in your example (not necessarily only one dataset), making sure some of the data to be structured, and some to be unstructured. You need to be specific about the data details, such as: where it comes from, how it can be collected, how it looks like (give few specific samples), and most importantly: how the data...

how do you write a real world application paper

How would one define business intelligence (BI)? Identify and briefly discuss a real-world application of BI?...

How would one define business intelligence (BI)? Identify and briefly discuss a real-world application of BI? 250 words and 2 references requires.

Define the term and explain a situation that demonstrates the ‘real world’ application of each of...

Define the term and explain a situation that demonstrates the ‘real world’ application of each of the following. Make sure your example clearly demonstrates your understanding of each concept. a. Trade Deficit and Trade Surplus ( ____/5) b. Current Account and Financial Account ( ____/5) c. Appreciation and Depreciation ( ____/5)

What are the real-world implications or application of the obtained results? (The answer to this question...

What are the real-world implications or application of the obtained results? (The answer to this question can be found by reading the “Discussion” section of the article, especially the “Conclusion” or last few paragraphs). and here are the discussion: Today’s students are quite different than those who populated university classrooms at the turn of the century. Raised in the internet age, constantly “plugged in”, seemingly inextricably attached to cell phones, and facile with all types of electronic media, these students...

7. Describe one real-world application of chemical systems in equilibrium. Clearly state the application and state...

7. Describe one real-world application of chemical systems in equilibrium. Clearly state the application and state how the knowledge of chemical systems has helped to make the process possible and / or easier. Then state the impact on the environment or on society

Search on the internet to find some real world example of the application of flexible budgets...

Search on the internet to find some real world example of the application of flexible budgets or standard costs

Please provide a 250 word explanation AND DESCRIPTION OF A REAL WORLD APPLICATION of one of...

Please provide a 250 word explanation AND DESCRIPTION OF A REAL WORLD APPLICATION of one of the following topics: -ideal gases or the ideal gas law -the gas constant or the Boltzmann constant -the root mean square speed of molecules in a gas -molar specific heat -the mean free path of a gas molecule Please be descriptive and include example equations if possible. If post meets requirements of 250 words, explanation of theory, AND A REAL WORLD APPLICATION, I will...

Write a Java application, and an additional class to represent some real-world entity such as a...

Write a Java application, and an additional class to represent some real-world entity such as a technology item, an animal, a person, a vehicle, etc. Keep in mind that a class is a model in code of something real or imagined, which has attributes (member variables) and behaviors (member methods). The class will: Create a total of 5 member variables for the class, selecting the appropriate data types for each field. For example, a class to represent a lamp might...

Subjects