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 ?
Equation (5) shows the market risk premium as computed by ex-ante population parameters; the expected rates of return and the covariances among the stochastic rate of returns.
Hence, we wish to determine if there is validity in this hypothesis and whether rates of return in the two markets (New York and Shanghai) are correlated after excluding the influence of their own lagged values.
For MRSK regional branches that switched to RAB from 2009 and 2010 as well as for FSK, the previously established regulatory rates of return for the first three years of RAB implementation, are due to remain unchanged.
The students enter formulas to calculate rates of return for the stocks as well as for the stock market index.
If this is indeed the case, then the net increment to the government of investing the trust fund in equities on an ongoing basis presumably would be less than the historical rates of return suggest.
The need to properly identify capital investments that possess multiple internal rate of return solutions is becoming more important in the work place since investments are now much more likely to have multiple internal rates of return than was the case a generation ago.
the standard deviation as a percentage of the mean rate of return) is easily derived from the volatility values given in the article and provides a better measure of the variance in the rates of return because it is directly related to the magnitude of the return.
1) These alternative measures overcome a major limitation of estimates of rates of return based on historical costs--the noncomparability of investments that differ considerably in age and therefore in price--by presenting estimates on a consistent valuation basis.
However, when [alpha] = 1 increasing return to scale) or 2 (constant returns to scale), the earned rates of return under linear price are not greater than those under perfect price discrimination.
Rather than relying solely on the state legislature for funds, they have proposed a Michigan Development Fund for private investors, who would provide the capital for selected timber-management activities with promising long-term rates of return.
Regression analysis is used to show how these differences in quality are reflected in differences in price, but not in differences in rates of return (section III).