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 ?
As previous authors have done, we consider a market with a risky security S and a risk-free security with annual return r and suppose that the log return for period [0, T] (denoted as [X.sub.T]) has a Gram-Charlier distribution under the risk-neutral (or "pricing") measure, which we denote as Q.
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).
t-test: [H.sub.0] states that the average daily log return of the investigated day is equal to the average daily log return of other weekdays.
For the WTI series, six input combinations based on previous log return of daily oil prices are evaluated to estimate current prices value.
Table 6 presents the expected log return under risk-based solvency requirements using [epsilon] = 0.025.
In the analysis of the performance of mutual funds in Slovenia from 2005 to 2009, we used the monthly log returns of funds.
This table shows the net return rather than the log return in order to include firms with payoffs of zero.
The monthly log returns of the two series are presented in Figure 1(A).
The expected log return on equity, like the expected log return on any other asset, is just a constant plus relative risk aversion times expected consumption growth.
In purely statistical terms, the standard CAPM beta--as well as our more complicated expression for beta--is the covariance of firm i's excess log return with the U.S.
We indicate the expectation and standard deviation of the return, and the skewness and kurtosis of the log return (to better illustrate the comparison with the Gaussian distribution).