An investment's rate of return is defined as the net profit or loss over a specific period of time expressed as a percentage of the investment's initial cost. To calculate the return rate, the percentage change from the beginning to the end of the term is used. The total rate of return includes not just the appreciation of assets, but also dividends and interest payments. Considering some investments will only have asset appreciation while others will have fixed cash payouts, it may be used to compare a variety of different kinds of investments.

A rate of return is the amount of money or percentage that an investment has earned. It can be calculated by dividing the value of the investment at the end of a specific period by the original value.

Rate of return is a financial metric used to measure the profitability of an investment over a specific period. It represents the percentage increase or decrease in the value of an investment relative to its initial cost. The rate of return takes into account both the capital gain or loss from changes in the investment's value and any income generated, such as dividends or interest.

The formula for calculating the rate of return is:

Rate of Return=
Final Value−Initial Value+Income/Initial Value ×100%

A positive rate of return indicates a profit, while a negative rate of return indicates a loss. Rate of return is a crucial concept for investors as it helps assess the performance of their investments, compare different investment opportunities, and make informed decisions about allocating their capital.