Yearly Rate Of Return Method

DEFINITION of 'Yearly Rate Of Return Method '

More commonly referred to as annual percentage rate. It is the interest rate earned on a fund throughout an entire year. The yearly rate of return is calculated by taking the amount of money gained or lost at the end of the year and dividing it by the initial investment at the beginning of the year. This method is also referred to as the annual rate of return or the nominal annual rate.


BREAKING DOWN 'Yearly Rate Of Return Method '

Calculated by:


Yearly Rate of Return = End of the year value - beginning of the year value
beginning of the year value



The yearly rate of return method give the owners an idea of how their investment in the company is doing year over year.

RELATED TERMS
  1. Annualized Rate

    A rate of return for a given period that is less than one year, ...
  2. Annualize

    1. To convert a rate of any length into a rate that reflects ...
  3. Real Rate Of Return

    The annual percentage return realized on an investment, which ...
  4. Compound Return

    The rate of return, usually expressed as a percentage, that represents ...
  5. Annual Return

    The return an investment provides over a period of time, expressed ...
  6. Effective Annual Interest Rate

    Effective Annual Interest Rate is an investment's annual rate ...
Related Articles
  1. Professionals

    Introduction

    FINRA/NASAA Series 66: Section 2 Measuring Portfolio Returns. This section discusses different return measures: return on investment, holding period, annualized, risk free and total returns.
  2. Term

    What's a Real Rate of Return?

    A real rate of return is an annual percentage investment return that’s adjusted for inflation, taxes or other factors.
  3. Professionals

    Measuring Portfolio Returns

    NASAA Series 65: Section 16 Measuring Portfolio Returns. In this section different types of risk measures discussed and some sample questions.
  4. Professionals

    Rates of Return

    FINRA/NASAA Series 66 Section 1 - Rates of Return. In this section internal rate of return (IRR), real return, expected return and risk-adjusted return.
  5. Economics

    Explaining Growth Rates

    Growth rate refers to the amount a specific variable or measure has grown over a specified time, whether related to one company or an entire economy.
  6. Professionals

    How To Measure Returns On The Series 65 Exam

    An investor who is evaluating the performance of a portfolio manager must take into consideration the impact that any contributions or withdrawals made by the investor will have on the overall ...
  7. Fundamental Analysis

    How To Calculate Your Investment Return

    How much are your investments actually returning? Find out why the method of calculation matters.
  8. Credit & Loans

    APR vs. APY

    Annual percentage rate and annual percentage yield are two ways companies calculate the amount of interest you can owe. Learn more about them and find out which is the better rate.
  9. Fundamental Analysis

    Explaining Annual Returns

    Annual return is the standard percentage rate for most investments and credit facilities.
  10. Investing Basics

    What's the Rate of Return?

    Rate of return is the earnings an asset generates in excess of its initial cost. The amount is usually expressed as an annualized percentage rate. Rate of return can be calculated based on the ...
RELATED FAQS
  1. What is the difference between a company's annual return and its annualized return?

    Understand the importance of calculating a company's annual return and its annualized return, and learn the differences between ... Read Answer >>
  2. What can cause the rate of return to be negative?

    Learn how poor company or sector performance, economic turmoil and inflation can cause the rate of return on an investment ... Read Answer >>
  3. How do I calculate my portfolio's investment returns and performance?

    Learn the basic principles underlying the data and calculations used to perform personal rates of return on investment portfolios. Read Answer >>
  4. What is the difference between yield and rate of return?

    Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept ... Read Answer >>
  5. How is the expected market return determined when calculating market risk premium?

    Find out how the expected market return rate is determined when calculating market risk premium and how these figures are ... Read Answer >>
  6. What are the advantages of using an effective interest rate figure?

    Understand what is meant by the effective interest rate, and learn why the effective rate calculation is preferred over the ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center