What is a Rate of Return?
Rate of Return, also called return on investmentROR or ROI for short, is the ratio of money gained or lost in relation to the initial amount of investment. Also simply called as return, it is the rate of profit or income you earn from your investment measured in percentages. It is oftentimes measured in annual or annualized rate of return on a specific calendar or fiscal year. This is your tool in determining how much your investment is gaining or losing, if it is appreciating or depreciating. How to Compute Rate of Return The rate of return is measured in percentages because monetary values cannot show a comparative relation of the gains and losses with the initial investment. For example, if you measure the gains of a £1,000 intial investment through a £50 interest and compare it with a £100 investment through its £20 interest, the £1000 investment would seem to be earning much more that the £100 investment. However, further computation using percentage of the rate of return would pr
