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    Rate of Return

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    Gaurav
    Rate of return (ROR), also known as return on investment (ROI), is a ratio that measures the money gained or lost on an investment relative to the amount invested. ROR is usually expressed as a percentage. The initial value of the investment and the final value must be clearly defined to calculate ROR. ROR can be calculated over a single period or expressed as an average over multiple periods using either arithmetic or geometric formulas.

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    Rate of Return

    Uploaded by

    Gaurav
    124 views2 pages
    Rate of return (ROR), also known as return on investment (ROI), is a ratio that measures the money gained or lost on an investment relative to the amount invested. ROR is usually expressed as a percentage. The initial value of the investment and the final value must be clearly defined to calculate ROR. ROR can be calculated over a single period or expressed as an average over multiple periods using either arithmetic or geometric formulas.

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    Rate of return (ROR), also known as return on investment (ROI), is a ratio that measures the money gained or lost on an investment relative to the amount invested. ROR is usually expressed as a percentage. The initial value of the investment and the final value must be clearly defined to calculate ROR. ROR can be calculated over a single period or expressed as an average over multiple periods using either arithmetic or geometric formulas.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    124 views2 pages

    Rate of Return

    Uploaded by

    Gaurav
    Rate of return (ROR), also known as return on investment (ROI), is a ratio that measures the money gained or lost on an investment relative to the amount invested. ROR is usually expressed as a percentage. The initial value of the investment and the final value must be clearly defined to calculate ROR. ROR can be calculated over a single period or expressed as an average over multiple periods using either arithmetic or geometric formulas.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Rate of return

    In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or
    sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an
    investment relative to the amount of money invested. The amount of money gained or lost may
    be referred to as intrest , profit/loss, gain/loss, or net income/loss. The money invested may be
    referred to as the asset , capital, principal, or the cost basis of the investment. ROI is usually
    expressed as a percentage rather than a fraction.

    Calculation
    The initial value of an investment, Vi, does not always have a clearly defined monetary value, but
    for purposes of measuring ROI, the initial value must be clearly stated along with the rationale
    for this initial value. The final value of an investment, Vf, also does not always have a clearly
    defined monetary value, but for purposes of measuring ROI, the final value must be clearly
    stated along with the rationale for this final value.
    The rate of return can be calculated over a single period, or expressed as an average over
    multiple periods.
    Single-period
    Arithmetic return
    The arithmetic return is:

    rarith is sometimes referred to as the.


    Logarithmic or continuously compounded return
    The logarithmic return continously rate of return, also known as force of intrest , is defined as:

    It is the reciprocal of the e-folding time.


    Multiperiod average returns
    Arithmetic average rate of return
    The arithmetic average rate of return over n periods is defined as:
    Geometric average rate of return
    The geometric average rate of return, also known as the time-weighted rate of return, over n
    periods is defined as:

    The geometric average rate of return calculated over n years is also known as the annualized
    return.

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