Rate of Return


  • The gains or profit from an investment that is typically expressed as equity divided by cash flow.

rate on investment, profit on vested interest, payment from investment, earnings to shareholders


Alternate Spellings
return, return on investment

Related Terms and Acronyms

  • Adjusted Cost Basis Definition,
    • The amount paid for an item, plus the amount paid for improvements, minus losses and depreciation. When the owner sells the item, the difference between the sales price and the adjusted cost basis is the profit or loss.
  • Annualized Internal Rate of Return (AIRR)Acronym,
    • The internal rate of return on an investment that makes the net present value of all cash from a particular investment equal to zero.
  • Capital Gain (CG) Acronym, Important,
    • The profit made by the seller when real estate or other capital assets are sold. Capital gains are taxed more favourably than earned income. However, this can be dependent on your tax bracket and the length of time you owned the asset before it was sold. You could pay approximately one-third to one-half less tax than you would pay on the same amount of earned salary.
  • Capitalization Definition,
    • An estimate of the value of a rental or commercial property using the rate of return on investment and the property's annual net operating income.
  • Capitalization Rate Definition,
    • An estimated percentage rate of return that a property will produce on the owner's investment.
  • Cash Flow Forecast Definition,
    • An estimate of when and how much money will be received and paid out of a business. It usually records cash flow on a month-by-month basis for a period of two years.
  • Cost Basis Definition,
    • The original price paid for an investment which is also known as the basis or tax basis. The cost basis includes any commissions or fees paid when the investment was purchased.
  • Dividend Definition,
    • Distribution of earnings to shareholders. In credit unions, it's the money paid to members for deposits, similar to the interest banks pay to their customers for deposits.
  • Expected Rate of Return (ERR)Acronym,
    • Internal Rate of Return (IRR) Acronym, Important,
      • That rate at which the present worth of all present and future investment costs equals the present worth of all present and future investment benefits.
    • Personal Rate of Return (PROR)Acronym,
      • A number for measuring the return you earned on your combined investment over a given time period. The PRR isolates and identifies the performance from cash flow letting you know how well your investment have done.
    • Yield-to-Maturity (YTM) Acronym,
      • The internal rate of return on an investment. Typically takes into account all investment returns and their timing.
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