Ads
related to: how to find required rate of return on stock
Search results
Results From The WOW.Com Content Network
In finance, return is a profit on an investment. [1] It comprises any change in value of the investment, and/or cash flows (or securities, or other investments) which the investor receives from that investment over a specified time period, such as interest payments, coupons, cash dividends and stock dividends.
The rate of return on a portfolio can be calculated indirectly as the weighted average rate of return on the various assets within the portfolio. [3] The weights are proportional to the value of the assets within the portfolio, to take into account what portion of the portfolio each individual return represents in calculating the contribution of that asset to the return on the portfolio.
The Formula to Calculate Return on Investment (ROI) Return on investment is the ratio of the purchase price to the difference between the purchase price and the selling price. Even though it is a ...
It is computed as the expected return divided by the amount invested. The required rate of return is what an investor would require to be compensated for the risk borne by holding the asset; "expected return" is often used in this sense, as opposed to the more formal, mathematical, sense above.
The stock market rate of return averages 10% per year over time, but it rarely hits that every year. Some years go into the red, while others hit 20+%.
For example, the stock market has provided about a 10% return over the last 50 years, as seen specifically with the S&P 500. Adjusted for an average inflation rate of 3%, that’s a 7% return ...