Define: Rate Of Return

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Definition: Rate Of Return



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Full Definition of Rate Of Return


The rate of return is the percentage gain or loss of an investment over a period of time. Rate of return is often expressed as an annual percentage; for example, an annual rate of return of 5 per cent means the investment gained 5 per cent over a twelve-month period.

The rate of return is based on the change in the value of the underlying asset, adjusted for payouts. A bond, for example, has a rate of return equal to the total interest paid by the bond adjusted for changes in the price of the bond itself. The rate of return of a stock is the change in price adjusted for any dividends. With mutual funds and other pooled investments, the rate of return must also account for any capital distributions.


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Definition Sources


Definitions for Rate Of Return are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th February, 2020