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rate of return
/reɪt əv rɪˈtɜːrn/
profitability of an investment
The mutual fund offers a high rate of return.
This means the fund provides significant profits compared to the initial investment.
Finance
technical
The percentage gain or loss on an investment over a specific period, expressed as a percentage of the initial investment.
Bonds typically offer a lower rate of return compared to stocks.
This means bonds provide smaller profits relative to the initial investment than stocks do.
The rate of return on this real estate project is projected at 12% annually.
This indicates that the investment is expected to yield a 12% profit each year.
The rate of return is a key metric for evaluating investment performance.
Collocations
annual rate of returnthe yearly profit percentage of an investmentexpected rate of returnthe anticipated profit percentage from an investmenthistorical rate of returnthe past profit percentage of an investment
Synonyms
Antonyms
Related Phrases
Pro Tip
Understanding Risk vs. Return
Higher rates of return often come with higher risk. Always consider the risk level when evaluating an investment's rate of return.
Gold Rule
Consistency in Measurement
Ensure that the rate of return is calculated over the same time period for fair comparisons between investments.
Word Origin
The term combines 'rate' (a measure of quantity) and 'return' (profit or gain), reflecting the financial concept of measuring investment performance.
Usage Notes
The rate of return is often used to compare different investment opportunities. It can be calculated as (current value - initial value) / initial value.
Word Breakdown
rate
a measure or proportion
rootof
belonging to or associated with
prepositionreturn
profit or gain from an investment
rootEnglish Dictionary