Rate of return意思
"Rate of return" is a financial term that refers to the gain or loss made on an investment over a particular period of time, expressed as a percentage of the original investment. It measures the profitability of an investment and is used to evaluate the performance of a portfolio or individual investment.
There are several types of rates of return, including:
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Annualized Return: This is the average compound return earned on an investment each year over a given period of time.
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Holding Period Return (HPR): This is the return earned on an investment over a specific holding period, expressed as a percentage of the initial investment.
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Internal Rate of Return (IRR): This is the rate of return that makes the net present value (NPV) of all cash flows from an investment equal to zero.
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Gross Rate of Return: This is the simple return on an investment before taxes and fees are taken into account.
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Net Rate of Return: This is the gross rate of return minus taxes and fees.
Investors often use rates of return to compare different investment opportunities and to make decisions about where to allocate their money. However, it's important to consider the time horizon, risk, and diversification of an investment when evaluating its rate of return.