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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

rate of return

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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%.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson

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.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

rate of return

The ratio between the earnings and the cost of an investment.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Should rates of return rise in the future, the future selling price of the asset (reversion) would be lower than if current rates prevail.
To calculate the required rate of return, the students must convert the weekly rates of return to annual figures using either the formula for Effective Annual Returns or Annual Percentage Rates (APR).
VALUING GUARANTEES ON A PENSION FUND'S RATES OF RETURN
Among the principal results of the research are: that both private and social rates of return are positive and "respectable", that additional investments in education exhibit diminishing returns, that females' rates of return exceeds males', that private rates of return exceed social returns and, not least, that rates of return to higher education have increased over the decade between 1981 and 1991.
At the private level, the calculated rates of return are 14.6 percent per year for men and 14.5 percent per year for women.
The risk of not discovering multiple internal rates of return is greatest where an iterative process is used which seeks only a single solution.
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).
Last week the FTS published on its web site draft orders for regulatory rates of return on regulatory asset bases (RAB) until 2015.
He added, 'Record net rates of return in the fourth quarter of 2006 reinforces hopes that business investment will be able to extend the substantially improved performance seen.'
The rates of return and risk measures are the most important characteristics that describe the financial instruments, thus, they are analyzed by investors.
In section 3 they then discuss how rates of return estimates might be useful for policy-makers, and in particular how those who are trying to understand and meet the skill needs of different sectors of the economy might use such information.
The average rates of return reported for buy-to- let investments were 11.8pc for investment property bought outright and 22.3pc for property geared with a 75pc mortgage.