rate of return

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Rate of return

Calculated as the (value now minus value at time of purchase) divided by value at time of purchase. For equities, we often include dividends with the value now. See also: Return, annual rate of return.

Rate of Return

In securities, the amount of revenue an investment generates over a given period of time as a percentage of the amount of capital invested. The rate of return shows the amount of time it will take to recover one's investment. For example, if one invests $1,000 and receives $150 in the first year of the investment, the rate of return is 15%, and the investor will recover his/her initial $1,000 in six years and eight months. Different investors have different required rates of return at different levels of risk.

rate of return

Rate of return.

Rate of return is income you collect on an investment expressed as a percentage of the investment's purchase price. With a common stock, the rate of return is dividend yield, or your annual dividend divided by the price you paid for the stock.

However, the term is also used to mean percentage return, which is a stock's total return -- dividend plus change in value -- divided by the investment amount.

With a bond, rate of return is the current yield, or your annual interest income divided by the price you paid for the bond. For example, if you paid $900 for a bond with a par value of $1,000 that pays 6% interest, your rate of return is $60 divided by $900, or 6.67%.

rate of return

the PROFITS earned by a business, measured as a percentage of the ASSETS employed in the business. See RETURN ON CAPITAL EMPLOYED.

rate of return

the PROFITS earned by a business, measured as a percentage of the ASSETS employed in the business. See NORMAL PROFIT, ABOVE-NORMAL PROFIT, RATE OF RETURN REGULATION, RETURN ON CAPITAL EMPLOYED.

rate of return

The ratio between the earnings and the cost of an investment.
References in periodicals archive ?
1 percent return and short-term securities/cash/other averaged a 9.
72 percent return by more than 31/2 percentage points.
It was almost as if millions of investors had read the article, digested its contents, were shocked at the prospect of getting a "dreary" 8 percent return on their money and bailed out entirely.
2 percent return is also less than returns the Commission has approved for jurisdictional electric utilities and less than many returns recently approved by state commissions for regulated gas distribution companies.
Inhis view, they are better off with a mere 2 percent return in a system that is destined for bankruptcy than with the choice to use any portion of their own withheld money to plan for their retirement.
If the investor bought the stock in a cash account and paid for it in full, she'll earn a 50 percent return on the investment.
Building an equivalent asset in the United States might produce a 10 percent or 11 percent return on cost," says Korpacz.
When traders are looking to get into stocks that can deliver hundreds, or even thousands of percent return, they have to look at penny stocks.
Six beat the 15 percent return of the Standard & Poor's 500 and four beat the Nasdaq's 35 percent return.
Based on current company financial information, this dividend is estimated to consist of 100 percent return of capital for book purposes.
Sales activity in well-located apartment properties also remains incredibly strong, with properties selling at a 67 percent return versus the 10 percent return they were trading at one to two years ago.
Burbank-based Align-Rite International, a maker of photographic plates used in the semiconductor industry, ranked 141st, with 24 percent average sales growth, 39 percent earnings per share growth, and 25 percent return on equity.