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 ?
Empirical results from this study show the presence of the leverage effect in the log returns of the JSE index.
First, the log return on the market (LogRm) is the log gross returns on the S&P 500 Index (For robustness, we also use the value-weighted and equal-weighted Center for Research in Security Prices [CRSP] index).
Vector Autoregressive Regression Parameter Estimates The table reports the OLS parameter estimates for a first-order VAR model including the demeaned log excess market return (LogRm), the demeaned log book-to-market (LogBP), and the demeaned log return on equity (LogROE).
0] states that the average daily log return of the investigated day is equal to the average daily log return of other weekdays.
Table 6 presents the expected log return under risk-based solvency requirements using [epsilon] = 0.
The expected log return is determined on the basis of [?
This table shows the net return rather than the log return in order to include firms with payoffs of zero.
The variance term on the left hand side of (4) is a Jensen's Inequality adjustment arising from the fact that we are describing expectations of log returns.
We examine two alternative crisis variables, each of which is the excess log return (in dollar terms) on an Asian portfolio, [R.
Personal Computer Companies and Stock Cumulative Values December 1983 through December 2006 Individual Companies Expected Return for CRSP Value- Industry Expected Mean Log Variance of Weighted Return Return Log Return Index Personal Computer 0.
The two propositions still obtain even when the log returns exhibit serial correlation, skewness, and fat tails.
Price MN portfolios EW CW LW Return 8,9% 8,8% -9,3% t-stat 0,99 1,20 -1,19 Volatility 28,2% 23,0% 24,9% Market model [beta] 0,42 0,12 0,16 t-stat 2,65 0,37 0,49 [alpha] 2,3% 7,3% -11,4% t-stat 0,32 0,88 -1,29 CAPM model [beta] 0,43 0,12 0,17 t-stat 2,68 0,38 0,52 [alpha] -0,6% 2,8% -15,7% t-stat -0,08 0,36 -1,84 Table 3: Factor correlations Table 3 exhibits Pearson's correlation coefficients of pre-cost log returns among market neutral factor-mimicking portfolios, stock market portfolio ("market") and yields in the cash market ("cash").