Questions tagged [rate-of-return]
For questions relating to various measures of the rate of return on an investment, e.g. Internal Rate of Return, Financial Management Rate of Return, etc. Note that questions about these terms that don't apply to personal finance or actual problems you face, e.g. homework questions, are probably off-topic.
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How do I compute the annual risk-free return?
I need to know what the annual risk-free rate of return has been. I know no such rate actually exists, so let's say I want to use the "overnight" rate as a proxy.
But the overnight rate is ...
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How to calculate combined win rate of two strategies?
Let's say I have two strategies with different win rates and expectancy, how would I calculate combined win rate without actually calculating each result (only use win rate and expectancy)?
Example ...
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What is the difference between Capitalization Rate and Return on Assets?
In real estate, the capitalization rate (cap rate) is one of the metrics used to assess the rental profitability of a property. The formula for capitalization rate is net operating income divided by ...
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How to deal with spinoffs when calculating money-weighted rate of return (MWRR) of a stock investment
I am using a spreadsheet's XIRR function to calculate the money-weighted rate of return (MWRR) of my investment in "X Corporation" stock. X conducted a spinoff of "Y Corporation". ...
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How to calculate Quartile (or Decile) returns
I have split the following portfolio of 20 stocks into 4 quartiles by say market cap. My main question is how would you calculate the Quartile return? Would you rescale the weights within each group ...
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Calculate Dividends Return from Total & Price returns
I understand Price returns and Total returns for stock indices. For example, total returns account for Dividends paid by the underlying stocks assuming they are reinvested back into the same. How do ...
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Is there a correlation between stock market returns and GDP growth in emerging markets?
Contrary to most people's expectations, there is a slight negative correlation between per capita GDP growth and real stock market returns. References:
Is There a Link between GDP Growth and Equity ...
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When using TWRR for an individual stock, how do I treat non-reinvested dividends?
I'm researching time-weighted rate of return calculations as a performance metric to use with individual stock security holdings. I've read multiple sources of information to include but not limited ...
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How do I calculate the performance of a stock investment in the presence of dividends, additional investment and partial sales?
What is a single metric I can use to calculate the performance of a stock investment in the presence of dividends, additional investment, and partial sales? Such a metric should be comparable across ...
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Calculating CAGR from annual investments
Let's say I invest x amount at the beginning of each year. After N years, my total investments are worth y.
How do I calculate the CAGR?
As a bonus, assume that my only tool is Google Sheets.
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Cash Flow vs Net Profit in Evaluating Capital Evaluation
In Kaplan's CFA Level 1 online course, it has been claimed that after-tax cash flow-based ratios (NPV) are better than profit-based ratios (ROE, EPS, etc...) in terms of evaluating capital allocation ...
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Understanding Time-Weighted Rate of Return
In general I consider myself a relatively maths-literate person, but I'm really struggling to understand TWRR (Time-Weighted Rate of Return); at least as my investment provider is presenting it to me.
...
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How to calculate profits from a short position [duplicate]
Say I have a $100 balance, the margin requirement is 10%, I short a stock at $100, and the stock drops down to $10, is my profit 90% or 1000%? To more more specific, is the profit 90% relative to my ...
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How is the average return rate of the S&P 500 annual return calculated?
I am trying to understand where the famous average return rate of about 10% of the S&P 500 comes from. In most conversations, the usual starting date is on 1965. Its averaging closing value at ...
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CAGR of Monthly Close Prices
In step 7 in this tableau tutorial he uses the number of periods as 12 I believe this number should change. So for instance if we started with January to March, the number of period would be 3. Then ...
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What is the real return of a portfolio? Markowitz vs "real" return
I am working with mean variance optimization (MVO) and as such after "training" my model I test the results on a test dataset. Markowitz states that the return of a portfolio is the "...
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How to calculate distribution return for ETF?
I'm trying to calculate Growth and Distribution returns for ASX:VGS for 2021 based on historical data, but the results do not match what's published.
Here I can see that in the 2021 Calendar year it ...
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Using Sharpe ratio to compare bitcoin investments?
I want to compare investment strategies in bitcoin.
So far I was using the money weighted rate of return and was comparing it between two different investors. The investor that has the biggest rate of ...
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What's the formula behind these two stock trading scenarios?
Let's say I have $10,000 in my account.
Scenario 1:
If I make 10 trades in a year and each trade I position size using only 25% every time and exit the trade after a 10% gain, my account would grow by ...
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Is it possible for the dividend rate to decrease at a constant rate to the future?
I came across the following question;
Mayfair corporation is expected to pay 40% dividends to its shareholders as its
next dividend. However, the company announces that it is not expecting to pay a
...
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How to calculate an annualized rate of return with a number of cash-secured Puts?
For cash-secured-puts I know how to calculate the annual return of a single one like:
(Returns divided by Capital at Risk) x (365 divided by Holding Period in days)
With a "wheel" strategy (...
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Scratching my head about the modified dietz method
I'm trying to compute the money weighted rate of return for my crypto investments using the modified dietz method, as I believe this is the golden standard to measure investment.
The formula is quite ...
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Why isn't there a universal investment standard/benchmark?
When I watch golf and look at the results of the top players, I can immediately know exactly how they compare both to the standard (called par) and to each other.
Why doesn't investing have such a ...
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What is the reason for higher returns in ELSS mutual funds when compared to other flexi cap equity mutual fund?
In general, how does ELSS mutual funds generate higher returns over long term (say 5 years or so) when compared to flexi cap mutual funds?
As far I know, in general both the segment of mutual fund ...
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Calculate the required return using an asset pricing model
The current stock price of HHBA A is 101.00$. The last dividend payed
for HHBA A is 3.50$, and dividends are expected to grow at a constant rate of 6%.
Now i should calculate the required return using ...
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What is "the index-linked variety"?
I am reading this article on The Economist.
It says that the new generation will gather lower returns on investments than the previous generations.
The authors estimated the future return on equities ...
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Calculating portfolio returns from multiple stocks using XIRR
I am confused and would like some clarification.
For around four years I have been building a portfolio of 30 stocks and I would like to calculate the portfolio returns as accurately as possible over ...
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How do you factor in inflation when calculating internal rate of return on an investment?
Say you invest $1000 into a venture on day 1. Then you invest another $1000 on day 365. Then, on day 730, its market value is worth $4000.
If I were to put these numbers into an Excel spreadsheet like:...
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How to Calculate Return of Multi Positional Trading Strategy
i have a trading strategy that buy multiple stocks in same time and sell another time. I want to calculate return of this strategy. Below table shows my positions that opened and closed.
From above to ...
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Money-Weighted-Return (MWR) or Time-Weighted-Return (TWR)?
Assume, I monthly invest a fixed part of my income. I strictly transfer this money to my broker account and never take money off (transfer-rule). There, I usually (but not always) immediately add to a ...
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What's wrong with the XIRR calculation here?
I am trying to learn how to use XIRR following tutorials.I think I'm overlooking something with this dataset problem when using Google Sheets to calculate XIRR. Can someone be kind enough to explain ...
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What am I missing with this XIRR calculation?
I have 70K at the beginning of the year invested in some fund with the below yield each month, is it correct that the IRR would be 50.90%? What am I missing? In some article that I've read, they were ...
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0% rate of return + inflation differs from inflation alone
Given that
Real Rate of Return = (1 + nominal rate) / (1 + inflation rate) -1
If my nominal rate equals the inflation rate I get 0, meaning that my money is worth the same no matter the inflation ...
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Derive Initial investment based on Compounded returns
I know the investment instruments, their average yearly returns, the duration of investment and the target corpus. Based on the target corpus and the average returns, I want to reverse engineer and ...
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Average Annual Total Return - How to calculate fractional number of years?
Per the SEC Form N-1A,
P(1+T)n = ERV
Where:
P=a hypothetical initial payment of $1,000.
T=average annual total return.
n =number of years.
ERV= ending redeemable value of a hypothetical $1,000 ...
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Comparison of expected returns from index funds and single shares
I shall start by saying I know little about markets, investing or gambling, but I do know a little bit about probability. This question is prompted by comments to this question, such as "As a ...
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Why would banks offer negative interest rates?
I recently saw news that Danish bank Danske Bank is going to be offering -1% return on balances over $16,000. Obviously nobody wants a negative return on their balances so nobody is going to want this....
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calculating stock investment return
Please help. I am stuck. I am still pretty new to investing, so please be nice and a simple explanation is much appreciated. I want to calculate the capital gains (NO DIVIDEND) annual return of a ...
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Comparing ROI taxed at ordinary income vs cap gains?
How can I demonstrate the performance of an investment that's taxed as ordinary income to one that's taxed at cap gains rates?
I run a small real estate investment fund, focused on flipping properties,...
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What is the highest return risk-free investment available?
Investing is about balancing risk and reward. Any good investment will typically allow for nominal risk for a healthy return, but let's suppose that's not what I'm looking for. I want something with ...
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Calculating the rolling performance of two securities over time
If I want to compare the relative price performance of two equities, an easy way would be to calculate the Comparative Relative Strength (CRS) and graph the result.
The calculation is simple. Divide ...
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How to calculate effective rate of return for annuity payments and annuity receipts?
There is an annuity annual payment of 100000 from year(s) 1-7. After these payments, there are annuity annual receipts of 153127 from year(s) 8-15. I want to know what is the effective return on this ...
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Proper way to annualize returns
Searching for "how to annualize interest rates" on Google leads to the following results:
Wikihow's How to Annualize a Percentage
Investopedia's Annualized Rate of Return
Wikihow
...
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Computed 401K RoR differs from broker's information
I have a 401k through Fidelity and have recently started being more active in the market. I was haphazardly selecting funds that seemed to do well but apparently wasn't the most advantageous due to ...
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The logic behind IRR
I can't still completely understand the logic behind the calculation of IRR.
It's all clear with NPV. Let's use simple example:
NPV = CashFlow / DiscountRate
100 = 110 / 1,1
But with the IRR..., the ...
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Is total rate of return for a stock posted on financial web sites?
I am a beginner trying to teach myself investing. I have read that it is important to look at the total rate of return for the stock when evaluating it (1, 3, 5 years). I understand the logic behind ...
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personal portfolio return calculation problem
I want to measure and evaluate the performance of my personal portfolio. However, I am concerned about confusion and miscalculation. Because when I calculate the time-weighted portfolio return rate in ...
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How to calculate ROI on my stock portfolio, from transactions logs?
I have a spreadsheet that contains all my current stock positions in one sheet (with how much I invested and the unrealized gain for each current position) and another sheet with my past positions (...
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Futures and dividends
Let's say I have a portfolio of futures for a long period (let's say 2000-2020).
All of my underlyings are equity indices.
I am always invested in the next maturity futures (thus I never wait for the ...
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Why do the paid prices for an accumulating ETF share follow the current net asset value per share?
It is pretty clear; if you hold a share of a distributing ETF, which is replicating a stock market index like S&P 500 for example, then you can count on regular dividends paid by the the ...
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