How do you calculate the expected rate of return?


A simple way to calculate the expected rate of return on an investment for a single period is by subtracting the initial investment from the final value of the investment and dividing it with the initial investment. There also also other formulas to calculate expected rate of return on a multiple period average. Rate of return can be defined as the ratio of money gained or lost basing on an investment.
Q&A Related to "How do you calculate the expected rate of return..."
1. Understand the expected rate of return formula. Like many formulas, the expected rate of return formula requires a few "givens" in order to solve for the answer. The
1. Determine which resource unit (workers, capital, etc. will be the base for your measurement of diminishing returns. Each resource unit must have a specific, fixed monetary cost
1. Annual return is the measure of how the mutual fund has changed in value over a 12-month period. The number is usually expressed in percentage terms for easy comparison. 2. For
1. Get the beginning market value of the portfolio. If you are calculating the rate of return for a period, the beginning market value is the ending market value of the prior period
1 Additional Answer Answer for: how to calculate expected rate of return
How to Calculate Expected Rate of Return
When it comes to making financial investments, investors want to know how much money they will make off the principal they invested. That might seem like a tall order: investors are somewhat at the mercy of the marketplace. However, by calculating the... More »
Difficulty: Moderately Easy
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