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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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1answer
35 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
951 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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3answers
158 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
53 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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3answers
315 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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1answer
148 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
145 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
186 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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0answers
41 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
172 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
173 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
63 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
68 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
59 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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1answer
187 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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1answer
69 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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2answers
179 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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0answers
60 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
93 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
171 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
190 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
171 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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2answers
131 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
120 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
143 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
711 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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1answer
82 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
41 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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2answers
121 views

Validating Annualized TWR

We have: an initial deposit of $2,500,000 Then, every year end we make a deposit of $750,000 We make this same deposit for 13 years At the end, we have a final value of $50,000,000 Our system ...
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2answers
192 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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2answers
6k views

What are the standard industry practices or disclosures for computing compounded interest on retail deposit accounts in the United States?

I'm seeking to understand how my bank calculates the interest on my various deposit accounts (Money Market, Interest Checking, Savings, Certificate of Deposit) in order to simulate and predict it to a ...
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1answer
158 views

How should I calculate how much my money is _grown_?

I invest in multiple streams - equities, mutual funds, bank deposits etc. Depending on the asset class, my rate of return is different, naturally. Some asset classes generate higher ROI (with higher ...
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2answers
996 views

A calculator that takes into account portfolio rebalancing? [closed]

I'm looking for a calculator that takes into account rebalancing when estimating total returns using historical data. For example, I'd input the following into the calculator: I have an initial $10,...
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2answers
563 views

What is the difference between Rate of return and Return on Investment

Investopedia Return on Investment (ROI) page says ROI can be used in conjunction with Rate of Return, which takes in account a project’s time frame From this I understood Return on Investment and ...
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1answer
26 views

Annualized return of bond fund

How do you calculate the say a 10-year annualized return of FTSE TMX Canada High Yield Bond Index. Please dumb it down as to the process.
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1answer
211 views

How is the “Hurdle Rate” of the Hedge Fund determined?

I understand that "High Water Mark" is the highest NAV value that the Hedge Fund has ever reached, and therefore, the threshold NAV value of the Hedge Fund in question needed in order for the Hedge ...
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4answers
600 views

Real Estate: Why does the maximum compound gain happen somewhere in the middle of the mortgage term?

I construct a spreadsheet to investigate when is the best time to pay off a house loan. In my model, there are two factors at work: The real estate appreciation rate, in this case I set it to 5% The ...
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3answers
214 views

What does Robinhood's account graph represent?

I'm confused at what the Y-axis of Robinhood's account graph represents. It is not labeled. It's showing $3,000 when hovering over a date well before I ever created an account on robinhood. I would ...
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2answers
109 views

How to calculate return on investment when the asset increased in value?

A house bought some years ago for 100K earns 5K each year. That's rent minus costs of ownership (maintenance, electricity, local taxes). Today that house would easily sell for 150K. The rent and ...
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1answer
94 views

Calculate ROI over multiple trades

I'm looking for a formula to calculate my over all return based on N trades and avg return per trade (R). Let's say: My average return per trade (R) is 5% and the number of trades (N) made are 100. ...
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1answer
79 views

Which investment in the world provides the highest return [closed]

There are several investment options available that include gold, real estate, T-bills, stocks, bonds etc. I have heard that the most return that you can get is stocks of small enterprises. Can anyone ...
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1answer
343 views

Intuition behind Internal Rate of Return (IRR)

What is the intuition behind Internal Rate of Return. From Wikipedia: The internal rate of return on an investment or project is the "annualized effective compounded return rate" or rate of ...
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1answer
199 views

Would high interest rates offset the issue of keeping money in a weak currency?

I am a UK resident and recently I managed to unlock an account in South Africa with FNB that my family had set up for me. The account is worth R90k (~£5k). I have no intention of moving back to South ...
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1answer
122 views

How can “fund performance” and “unit values” go in opposite directions?

I have a "variable annuity" with Lincoln. They have a "historic unit values" page that says fund X increased 40% since the end of last year, to yesterday. And that fund Y increased 23%. But they ...
2
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1answer
29 views

Understanding how to compare internal rate of return to fixed income investment

I know that the IRR is the interest rate that makes the net present value zero. And I understand that a higher IRR means a better investment. So if I calculate an IRR of 14% for an investment and I ...
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1answer
246 views

Where to find the 5 or 10 year returns for a mutual fund?

I’m researching some mutual funds and am trying to find the 5 or 10 year return. However, all I can find is the YTD return. For example, Yahoo Finance shows the Yacktman Focused Svc (YAFFX) has an 8....
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2answers
66 views

Return calculation on a security that you are rebalancing

Suppose you have some security A, and the suppose the following: Initial amount of security bought: 100 Initial price: $10 Suppose after some time: Sold qty: 10 Sold at: 11 Then you buy some ...
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1answer
740 views

Calculating Simple Portfolio Returns with Rebalancing or Adding/Removing Securities

Given a set of portfolio weights, w, and historical security prices, I am looking to calculate a simple portfolio return via: where R is the simple return for a given security from time t to t+1: ...
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2answers
30k views

How to calculate the standard deviation of stock returns?

I'm trying to learn the the Black–Scholes option pricing formula and one of the elements of that formula (according to http://bradley.bradley.edu/~arr/bsm/pg04.html) is the "standard deviation of ...