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 ?
Should this be the case, market equilibrium is irrelevant to CAPM, and the required rate of return on an asset based on the market equilibrium in CAPM must equal the assumed expected rate of return on an asset in Equation (1).
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Marginal rate of return is then calculated by dividing marginal benefit of each experimental treatment by its marginal cost which then expressed as percentage.
This is the rate of return you can expect on risk-free investments.
For our adult staff, our rate of return is better than 80 percent.
The net rate of return for manufacturing companies has declined in each quarter of 2000.
Adding one to the rate of return, finding the geometric mean and then subtracting one to arrive at the annual rate of return easily remedies this
Having the trust fund invest in private securities most likely would increase its rate of return, although the increase might be less than historical rates of return would suggest and certainly would be less on a properly risk-adjusted basis.
It is true that your payroll taxes earn a low rate of return.
Even as its solvency slips away, Social Security promises to provide Americans currently compelled to contribute to it an extremely poor rate of return.
The second return concept is the "allowed rate of return.
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.