Quick Definition

Rate of Return (RoR) is a financial metric used to measure the gain or loss on an investment relative to its cost.

Formula

Examples

• 1An investor buys stock at $100 and sells it a year later for $120. The rate of return is 20%.
• 2A real estate investor purchases a property for $200,000 and after renovations sells it for $250,000, achieving a 25% rate of return.
• 3A mutual fund reports a 5-year average rate of return of 7% per annum, indicating consistent growth over the period.

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