Answer: the increase or decrease in the original purchase price of an investment.
rate of return
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Key Takeaways The rate of return (RoR) is used to measure the profit or loss of an investment over time. The metric of RoR can be used on a variety of assets from stocks to bonds real estate and art. The effects of inflation are not taken into consideration in the simple rate of return ...
Common alternative measures of returns include: Internal Rate of Return (IRR) Internal Rate of Return (IRR) The Internal Rate of Return (IRR) is the discount rate that... Return on Equity (ROE) Return on Equity (ROE) Return on Equity (ROE) is a measure of a company's profitability that... Return on ...
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In its simplest form John Doe's rate of return in one year is simply the profits as a percentage of the investment or $3 000/$500 = 600%. There is one fundamental relationship you should be aware of when thinking about rates of return: the riskier the venture the higher the expected rate of return. For example investing in a restaurant is much riskier than investing in Treasury bills.
The rate of return is compared with gain or loss over investment. The rate of return expressed in form of percentage and also kno...
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