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Percent Rate of Return Formula:
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Percent Rate of Return is a fundamental financial metric that measures the percentage gain or loss on an investment relative to the initial amount invested. It provides a standardized way to compare investment performance across different assets and time periods.
The calculator uses the simple percentage return formula:
Where:
Explanation: This formula calculates the relative change in value as a percentage of the original investment, providing a clear measure of investment performance.
Details: Calculating percent return is essential for investment analysis, portfolio management, and financial planning. It helps investors evaluate performance, make informed decisions, and compare different investment opportunities.
Tips: Enter both ending and beginning values in any currency unit. Ensure beginning value is greater than zero. The calculator will automatically compute the percentage return.
Q1: What does a negative percent return indicate?
A: A negative percent return indicates a loss on the investment, where the ending value is less than the beginning value.
Q2: How is this different from annualized return?
A: This calculates simple total return, while annualized return accounts for the time period and compounds returns over multiple years.
Q3: Can I use this for any time period?
A: Yes, this formula works for any time period, but remember it doesn't account for the length of the investment period.
Q4: What is considered a good percent return?
A: This varies by asset class and market conditions. Generally, returns should exceed inflation and benchmark indices to be considered good.
Q5: Does this include dividends or interest?
A: No, this is price return only. For total return calculations, you should include all income received from the investment.