Average Return

Filed Under » ,
Dictionary Says

Definition of 'Average Return'

The simple mathematical average of a series of returns generated over a period of time. An average return is calculated the same way a simple average is calculated for any set of numbers; the numbers are added together into a single sum, and then the sum is divided by the count of the numbers in the set.
Investopedia Says

Investopedia explains 'Average Return'

For example, suppose an investment had returned the following annual returns over a period of five full years: 10%, 15%, 10%, 0% and 5%. To calculate the average return for the investment over this five-year period, the five annual returns would be added together and then divided by five. This produces an annual average return of 8%.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Compound Net Annual Rate - CNAR

    The return on an ...
  2. Average Annual Return - AAR

    A percentage ...
  3. Actual Return

    The actual gain ...
  4. Total Return

    When measuring ...
  5. Sacred Cow

    A firmly held ...
  6. Growth Rates

    The amount of ...
  7. Compound Return

    The rate of ...
  8. Turtle

    A nickname given ...
  9. Neoclassical Growth Theory

    An economic ...
  10. Annual Return

    The return an ...

Articles Of Interest

  1. Compound Annual Growth Rate: What You Should Know

    The CAGR is a good and valuable tool to evaluate investment options, but it does not tell the whole story.
  2. Overcoming Compounding's Dark Side

    Understanding how money is made and lost over time can help you improve your returns.
  3. Find The Highest Returns With The Sharpe Ratio

    Learn how to follow the efficient frontier to increase your chances of successful investing.
  4. The Impact Of Combining The U.S. GAAP And IFRS

    The convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
  5. Analyze Cash Flow The Easy Way

    Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
  6. Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  7. CPA, CFA Or CFP® - Pick Your Abbreviation Carefully

    A couple of letters can mean a big difference. Find out which designation you need and how to get it.
  8. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.
  9. Understanding Pro-Forma Earnings

    These figures can either shed light on a company's performance or skew it. Find out why.
  10. Analyzing Operating Margins

    Find out how to put this important component of equity analysis to work for you.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center