Answer :
### Step-by-Step Solution:
#### Calculating ROI Dollar Amount and Percentage
1. Initial Investment:
- You invested [tex]$100 in stocks. 2. Final Value: - After one year, you sold the stocks for $[/tex]115.
3. Calculate the ROI Dollar Amount:
- ROI (Return on Investment) dollar amount is calculated by subtracting the initial investment from the final value.
- ROI dollar amount = Final Value - Initial Investment
- ROI dollar amount = [tex]$115 - $[/tex]100
- ROI dollar amount = [tex]$15 4. Calculate the ROI Percentage: - ROI percentage is calculated by dividing the ROI dollar amount by the initial investment and then multiplying by 100. - ROI percentage = (ROI Dollar Amount / Initial Investment) * 100 - ROI percentage = ($[/tex]15 / [tex]$100) * 100 - ROI percentage = 0.15 * 100 - ROI percentage = 15% So, the ROI dollar amount is $[/tex]15, and the ROI percentage is 15%.
#### Recommendations for Investments
Here are three investments I would like to make with my income, along with explanations and classifications:
1. Stock Market (Equity Investment):
- Explanation: I want to invest in the stock market because it has the potential for high returns over the long term. Stocks represent ownership in a company, and as the company grows and becomes more profitable, the value of the stocks increases.
- Classification: This is an equity investment because it involves owning shares of a company.
2. Government Bonds (Debt Investment):
- Explanation: Buying government bonds is a safer investment as they are backed by the government and provide stable returns with low risk. Government bonds pay interest over time and return the principal at maturity.
- Classification: This is a debt investment because you are lending money to the government in exchange for interest payments.
3. Real Estate (Equity Investment):
- Explanation: I want to invest in real estate for both property appreciation and rental income. Real estate can provide a steady rental income and has the potential to appreciate significantly over time.
- Classification: This is an equity investment because it involves owning a tangible asset (property).
Each of these investments serves a different purpose: stocks for potential high returns, bonds for stability and security, and real estate for passive income and long-term appreciation.
#### Calculating ROI Dollar Amount and Percentage
1. Initial Investment:
- You invested [tex]$100 in stocks. 2. Final Value: - After one year, you sold the stocks for $[/tex]115.
3. Calculate the ROI Dollar Amount:
- ROI (Return on Investment) dollar amount is calculated by subtracting the initial investment from the final value.
- ROI dollar amount = Final Value - Initial Investment
- ROI dollar amount = [tex]$115 - $[/tex]100
- ROI dollar amount = [tex]$15 4. Calculate the ROI Percentage: - ROI percentage is calculated by dividing the ROI dollar amount by the initial investment and then multiplying by 100. - ROI percentage = (ROI Dollar Amount / Initial Investment) * 100 - ROI percentage = ($[/tex]15 / [tex]$100) * 100 - ROI percentage = 0.15 * 100 - ROI percentage = 15% So, the ROI dollar amount is $[/tex]15, and the ROI percentage is 15%.
#### Recommendations for Investments
Here are three investments I would like to make with my income, along with explanations and classifications:
1. Stock Market (Equity Investment):
- Explanation: I want to invest in the stock market because it has the potential for high returns over the long term. Stocks represent ownership in a company, and as the company grows and becomes more profitable, the value of the stocks increases.
- Classification: This is an equity investment because it involves owning shares of a company.
2. Government Bonds (Debt Investment):
- Explanation: Buying government bonds is a safer investment as they are backed by the government and provide stable returns with low risk. Government bonds pay interest over time and return the principal at maturity.
- Classification: This is a debt investment because you are lending money to the government in exchange for interest payments.
3. Real Estate (Equity Investment):
- Explanation: I want to invest in real estate for both property appreciation and rental income. Real estate can provide a steady rental income and has the potential to appreciate significantly over time.
- Classification: This is an equity investment because it involves owning a tangible asset (property).
Each of these investments serves a different purpose: stocks for potential high returns, bonds for stability and security, and real estate for passive income and long-term appreciation.
