Rate Of Return

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DEFINITION of 'Rate Of Return'

The gain or loss on an investment over a specified period, expressed as a percentage increase over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains.

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BREAKING DOWN 'Rate Of Return'

A rate of return measurement can be used to measure virtually any investment vehicle, from real estate to bonds and stocks to fine art, provided the asset is purchased at one point in time and then produces cash flow at some time in the future. Financial securities are commonly judged based on their past rates of return, which can be compared against assets of the same type to determine which investments are the most attractive.

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RELATED FAQS
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    In finance, the rule of 72 is a useful shortcut to assess how long it takes an investment to double given its annual growth ... Read Full Answer >>
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    You can calculate the approximate amount of years it would take an investment to double, given the annual expected rate of ... Read Full Answer >>
  3. What is the difference between a company's annual return and its annualized return?

    For most investors, determining whether an investment in a particular company or mutual fund is worthwhile comes down to ... Read Full Answer >>
  4. What can cause the rate of return to be negative?

    Several factors can cause an investment to have a negative rate of return. Poor performance of a company or companies, turmoil ... Read Full Answer >>
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    The current Social Security system in the United States operates in a pay-as-you-go framework; the Social Security taxes ... Read Full Answer >>
  6. What are some of the limitations of only looking at the rate of return for an investment?

    Analyzing investment performance over a specific time frame is a tool commonly used by investors to compare investments opportunities ... Read Full Answer >>
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