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 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 fiveyear period, the five annual returns would be added together and then divided by five. This produces an annual average return of 8%.
To learn more about average return, check out Why is the compound annual growth rate (CAGR) misleading when assessing longterm growth rates?

Sacred Cow
A firmly held mainstream belief that is considered to be true ... 
Compound Net Annual Rate  CNAR
The return on an investment after taking tax implications into ... 
Neoclassical Growth Theory
An economic theory that outlines how a steady economic growth ... 
Annual Return
The return an investment provides over a period of time, expressed ... 
Actual Return
The actual gain or loss of an investor. This can be expressed ... 
Average Annual Return  AAR
A percentage figure used when reporting the historical return, ...

Investing Basics
Overcoming Compounding's Dark Side
Understanding how money is made and lost over time can help you improve your returns. 
Bonds & Fixed Income
Find The Highest Returns With The Sharpe Ratio
Learn how to follow the efficient frontier to increase your chances of successful investing. 
Forex Education
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. 
Fundamental Analysis
What is the difference between cost of equity and cost of capital?
Read about some of the differences between a company's cost of equity and its cost of capital, two measures of its required returns on raised capital. 
Fundamental Analysis
Is depreciation only used for tangible assets?
Learn if tangible assets can be depreciated, as well as what other assets are eligible for depreciation so you can account for them accurately. 
Fundamental Analysis
What does a high weighted average cost of capital (WACC) signify?
Find out what it means for a company to have a relatively high weighted average cost of capital, or WACC, and why this is important to lenders and investors. 
Fundamental Analysis
How do intangible assets appear on a balance sheet?
Understand how various types of intangible assets are handled in a company's accounting and which of them you can find on a company's balance sheet. 
Economics
What's the relationship between r squared and beta?
Learn about the relationship between Rsquared and Beta. Explore how the concepts are related and often used in conjunction with portfolio Alpha. 
Fundamental Analysis
What is the difference between operating cash flow and net income?
Learn how net income is an income statement for a certain period of time, while cash flow shows inflows and outflows based on conversion of sales into cash. 
Fundamental Analysis
How do I calculate dividend payout ratio from a balance sheet?
Understand what the dividend payout ratio indicates and learn how it can be calculated using the figures from a company's balance sheet statement.