Define: Average Rate Of Return

Average Rate Of Return
Average Rate Of Return
What is the dictionary definition of Average Rate Of Return?
Dictionary Definition of Average Rate Of Return

Average Rate of Return (ARR) is a financial metric used to measure the profitability of an investment over a specific period of time. It is calculated by dividing the total profit or return earned from an investment by the initial investment amount and expressing the result as a percentage. ARR is commonly used by investors and analysts to evaluate the performance of an investment and compare it to other investment opportunities. A higher ARR indicates a more profitable investment, while a lower ARR suggests a less profitable investment.

Full Definition Of Average Rate Of Return

The average rate of return is a financial metric used to measure the profitability of an investment over a specific period of time. It is calculated by dividing the total return on investment by the number of years the investment was held, and then expressing it as a percentage. The average rate of return provides investors with a standardized way to compare the performance of different investments and make informed decisions. It is commonly used in financial analysis, investment planning, and evaluating the overall performance of a portfolio.

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This glossary post was last updated: 29th March 2024.

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