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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50 views

Is it good to invest in mutual fund during the down time in market?

Say there is a mutual fund and its annual return in the past 3 years i.e. 2017, 2018, 2019 were -10%, +20%, and -10% respectively. A and B invest $100 in this fund at different time points. A ...
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25 views

Testing the CAPM using the Fama-MacBeth (1973) Approach

I need to conduct the Fama-MacBeth (FM) procedure for my thesis to test the ability of the Fama-French (2015) and Carhart (1997) six-factor model to predict future expected returns. In univariate ...
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1answer
32 views

Calculation of YTD return in case of portfolio rebalance

I want to calculate a couple of metrics for portfolio. However, only examples I can find over the internet do not cover portfolio rebalances. Suppose the following scenario: Jan 1st, buy portfolio ...
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1answer
61 views

Comparing two options of investment

An investor is considering to buy a property. It costs $200.000,00 and it will allow him to receive $28.000,00 during the first year (which will decrease $300,00 per year). If he buys this property, ...
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15 views

Intuition behind calculating equity return when P/E ratio changes

In book "A Random Walk Down Wall Street" I came across the calculation of long-term equity return which was long-run equity return = Initial dividend yield + growth rate Where the growth rate, as ...
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3answers
400 views

How to calculate the return from a mutual fund?

How do I calculate the return from a mutual fund invested as a monthly SIP of Rs. 5000 over a period of 3 years at a return rate of 20.4% per annum? The projected amount for the same is calculated by ...
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1answer
36 views

Trying to understand the investment 'fundamental returns' definition by John C Bogle (what is earnings growth?)

I have been reading a book written by John C Bogle. One of his quotes is: The reality is that the fundamental return, the dividend yield plus the earnings growth of companies I'm trying to ...
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1answer
83 views

How are net income and yield calculated for margin trading?

You have purchased 150 shares at 10 each. You expect to sell these at 15 each. You only managed to sell 100. Out of your initial purchase price, 400$ were borrowed. Brokerage fee= 2% for the ...
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4answers
344 views

Table of how many years it takes to make a specified return on the stock market?

Suppose I want to know "if I want to make a 30% return on the stock market, how many years should I expect to wait?" I know the real answer is "it depends - if the market does horrible it could ...
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2answers
160 views

Mathematical proof of rate of return after tax

It is well known in engineering economic that rate of return after tax can be computed by multiplying tax rate and nomial rate of return which is the rate of return before tax. This relation is known ...
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35 views

How to calculate portfolio return and compare it with benchmark?

I want to ask how to calculate return on my portfolio and how can I compare it with benchmark index I invested 34500 on 19 dec 2019. Then I added further 25000 on 19 march 2020 out of 25000 I used ...
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23 views

How to calculate total annual return of ZCN ETF using Yahoo Finance?

The ETF that I'm looking at in particular is ZCN. According to Yahoo Finance, the total annual return for this ETF in 2010 was 13.63%. I'm trying to arrive at this number using the historical prices,...
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1answer
154 views

Is the S&P500's excess return above Treasuries after investing monthly for forty years really 3.6% annualized?

I was playing with Robert Shiller's U.S. Stock Markets 1871-Present and CAPE Ratio dataset to simulate an investor who buys the S&P500 with their monthly savings—equal to that month's CPI—for the ...
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1answer
50 views

How to calculate mean annualised returns

I am trying to calculate the mean annualised return for a fund using historical monthly returns but I am having difficulty in finding an appropriate method to do so. Many studies have used mean ...
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54 views

How to calculate stock return

Is there a formula to calculate compound return of a given stock, taking into account dividend and reinvestment? For example, a stock which returns 5% yearly plus a 3% annual dividend (paid every ...
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2answers
282 views

All-in-one international ETF vs weighted region-based ETFs performance

If you only consider returns (and not trading fees or total expense ratios or tracking errors as mentioned by D Stanley below), what would be the difference between a single ETF and several ones ...
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1answer
52 views

Help to understand money market fund total return

Take Schwab money market fund as an example - On the page of SWVXX, the following information is listed - yields: 7-day yield (without waivers) - 1.44% net expense ratio: 0.34% returns (annualized): ...
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1answer
128 views

How to interpret returns on index funds

I don't quite understand how investing into index funds works, or how to interpret the average historical returns. Let's say that, 10 years ago, I decided to invest $30,000 dollars at the end of each ...
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1answer
182 views

How is the return rate on index funds calculated?

For example, I was viewing this mid-cap index fund: http://www.bloomberg.com/quote/VMGRX:US It says the annual return is 16.41%. How is that calculated? The index has not risen enough in price over ...
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3answers
586 views

Why do people claim that Stock Markets are broadly exponential in the long term?

I've always heard Stock investment being described in terms of getting X% return per-year in the long-running. But looking at the FTSE in the long-term doesn't suggest an exponential growth? See below,...
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3answers
380 views

Does investing in the S&P 500 for 3 years yield better yearly returns than investing for 15 years?

I know that my logic is missing something crucial as I always assumed that the longer you leave your money for the closer it approaches to the long term average return. I was just reading this ...
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2answers
109 views

Comparing APY to Money (or time) Weighted Return

I have a savings account with Ally and an investment account with Wealthfront. I'd like to know how the investment is doing, compared to just leaving the money in my savings account. Ally gives me an ...
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27 views

Calculating return - mix of ROI and TWR

I've got a portfolio with a mix of buy and total sell and some with a mix of buy and partial sell. For the buy and total sell, a simple ROI calculation will work BUT given there are also a mix of buy ...
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15k views

Calculate annualized return on stock with multiple transactions

I understand how to calculate the Annualized return on a stock when I have single purchase ie (principal + gain/principal) ^ (365/days) - 1 but how is it calculated when I have multiple buys and ...
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1answer
45 views

How to calculate monthly return on a changing capital base when swing trading?

I'm just starting out in swing trading, and I'm facing a somewhat nagging doubt. Since last January I executed 27 trades, with varying results. I am tracking down the percent return on each trade ...
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3answers
1k views

Can you have a positive return with a balance below cost basis?

I use Fidelity for an investment. Their website says I have a cost basis of $5000.00 invested in FUSVX. Now the balance of this mutual fund (which I believe is simply market value at closing from ...
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172 views

calculate equivalent yearly interst rate on house purchased with a mortgage

I've got 60k and I'm looking at buying a house for 145k. The bank offered me a 20 year loan of 100k at ~1.8% interest rate. After 20 years I would have repaid the bank around 16k, according to their ...
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2answers
99 views

How do I calculate annual return for each of the 5 years from monthly historical data?

How do I calculate the annual return for each of the 5 years from monthly historical data? How do I account for stock split and dividends in the year? I'm not sure if this is the way to calculate. ...
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1answer
153 views

Portfolio questions

I am constructing a portfolio and considering a number of different security classes: Stocks, commodities, ETFs, currencies and bonds. In order to decide which securities to include in my Portfolio ...
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2answers
190 views

Calculate T-Rex score step by step

I am having problem calculating T-REX Score which is given here https://larrybates.ca/t-rex-score/. I can calculate my T-REX Score by putting my data in the calculator given in that website. But I ...
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1answer
196 views

Do low cost ETFs or mutual funds really do well for an investor?

There are many ETFs, Mutual Funds and Unit Trusts in the market. Some ETFs advertise a low Expense Ratio and Total Expense Ratio. There are many examples: IVV, VOO and SPY for S&P 500 VNQ, RWR ...
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53 views

Options trade - statistically expected return calculation?

I also asked this question here, for it to get more visibility. I am calculating expected return for composite option strategies based on event probabilities provided by the broker. For example, ...
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3answers
227 views

How to annualize a loss of 100% for an investment?

Assume, I lend someone money against a certain fee or interest (charged at the day the loan gets repaid). The loan defaults and I get no fee or interest back. Hence, I have a return of -100% as all my ...
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1answer
54 views

Are divisions of returns linear?

If I have an annualized 5% return on $2,000, which is $100, can I always say that each 1% is $20? If that is the case, then this linear division of an annualized returns can be applied to more ...
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3answers
181 views

Mathematical correct way to calculate the average net annual return of an split up investment?

I have an investment which creates different returns over a different period of time, i.e. I finance $1000 and get paid back $600 after 30 days (for which I earn a fee of $30), another $300 over 50 ...
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0answers
81 views

How to handle annualizing returns over short time interval leading to huge annualized return?

When calculating the annual return of an investment (as (1 + return in %)^(365/days)-1) over a very short time period - say 2 days - my annual return explodes due to the exponential term, which I ...
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1answer
484 views

Calculating the expected return of bonds given a default rate

In The investor’s manifesto book by W. Bernstein there is an example of calculating the expected return of corporate bonds. It goes like this: Given that 10-year bonds yield an interest coupon of 7 ...
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1answer
429 views

What is “normal” return?

In the book, The Basics of Finance, it is mentioned a few times about the term "abnormal returns" from beating the market. May I know what then does a "normal return" refer to? If a company is ...
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2answers
186 views

30 yr mortg + IRA/stock market, OR 15yr mtg then 15 yrs IRA/stocks

I'm planning to refinance the mortgage given the low rates these days. Need to make a choice between a 30 yr fixed and a 15 or 20 yr fixed. Monthly household budget can accommodate any of the mortgage ...
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84 views

Calculating the Nominal Rate of Return of a dividend paying stock

How is the nominal rate of return for a dividend paying stock calculated. I understand that nominal return is calculated using the formula: (Current Market Value - Original Purchase Price) / Original ...
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1answer
359 views

How can I calculate the monthly total return for the S&P500 (SPX) stock?

I look at the monthly returns for SPX here: Morningstar January February March April May June 2019 7.87 2.97 1.79 3.93 -6.58 6.89 Now, ...
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3answers
178 views

Two investments with same % returns but different dollar returns

If two investments have returns of 20% and the same amount of risk but: InvestmentA: returns $200 requires more capital InvestmentB: returns $50 requires much less capital than A Is InvestmentA the ...
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1answer
192 views

Negative rates on government bonds

Take the german 10J-Bundesanleihe for example, as far as I know the rates for it went negative recently. Is there any incentive for private investors / or institutional ones to invest now into this ...
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2answers
184 views

How do I calculate the return on my stock _call_ option, similar to my _put_ example?

I'm trying to figure out the effective percentage return when I write ("sell to open") a stock call option. I think I've figured it out for put options. Consider this put example I think XYZ stock ...
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183 views

How inflation affects returns and dividends

How inflation is linked to returns AND dividends? We know that adj returns are (1+return)/(1+inflation) -1 But how do we account for dividends? Suppose: 10% annual return 3% inflation 4% dividend ...
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1answer
122 views

How to adjust for long term inflation in an investment plan

So I have my investment Plan set in March 2019, with initial portfolio value of 250.000€, annual return 11% and long-term inflation rate at 1.5%. As you can see in column A, I have Capital BoP, ...
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4answers
148 views

What is an appropriate metric measure average annualized rate of return for an average investor?

Let us say an investor invests $X per year for N years. Let us say the final portfolio value is $Y. In this scenario, how should I measure a metric that quantifies "average annualized return"? I ...
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1answer
2k views

How to calculate quarterly returns from monthly?

The following monthly returns: 56.12% 15.00% -2.27 equal 75.46% for the quarter. What is the calculation to get 75.46%?
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85 views

Is there a type of investment that doesn't eventually cost the business money for a return?

I have been doing research on types of investing and funding for a startup, but I'm still pretty clueless, so please disregard this question if it's ridiculous. I also apologize if this is the wrong ...
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1answer
45 views

How to calculate return on capital for calendar year?

For an options portfolio, I'd like to calculate return on capital from Jan to Dec. These are monthly options that are held for a few days to months. There's a couple of problems with trying to ...

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