Rate of return: Difference between revisions

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imported>Doug Williamson
(Expand the page for different annual bases of quoting rates.)
imported>Doug Williamson
(Add page link to Periodic page in body of text.)
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=== Basis of quoting rates of return ===
=== Basis of quoting rates of return ===


The rate of return in the example above has been calculated and stated on a periodic basis.
The rate of return in the example above has been calculated and stated on a [[periodic]] basis.


Rates of return are often also quoted on an annual basis, following the conventional quoting convention for the market in which the proposed deal is being quoted.
Rates of return are often also quoted on an annual basis, following the conventional quoting convention for the market in which the proposed deal is being quoted.

Revision as of 17:04, 19 November 2015

The investor's return on an investment, expressed as a proportion of the amount invested.

Most commonly expressed as a percentage.


Example

GBP 1 million is invested.

GBP 1.03 million is repayable at the end of the period.


The rate of return per period (r) is:

r = (End amount / Start amount) - 1


Which can also be expressed as:

r = (End / Start) - 1

or

r = <math>\frac{End}{Start}</math> - 1


= <math>\frac{1.03}{1}</math> - 1

= 0.0300

= 3.00% per period


Basis of quoting rates of return

The rate of return in the example above has been calculated and stated on a periodic basis.

Rates of return are often also quoted on an annual basis, following the conventional quoting convention for the market in which the proposed deal is being quoted.


See also