Rate of return: Difference between revisions
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The investor's return on an investment expressed as a proportion of the amount invested. | The investor's return on an investment, expressed as a proportion of the amount invested. | ||
Most commonly expressed as a percentage. | Most commonly expressed as a percentage. | ||
Revision as of 13:46, 17 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 periodic rate of return (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
= 0.03
= 3%
