How Do You Spell AVERAGE RATE OF RETURN?

Pronunciation: [ˈavɹɪd͡ʒ ɹˈe͡ɪt ɒv ɹɪtˈɜːn] (IPA)

The term "average rate of return" describes the amount of profit or loss generated by an investment over a specified period of time. The spelling of this term is straightforward, with each word spelled phonetically as "ˈævərɪdʒ reɪt ʌv rɪˈtɜrn." The first word is pronounced with the short "a" sound and the emphasis on the first syllable, while the second word is pronounced with a long "a" sound and the emphasis on the second syllable. Finally, the last word is pronounced with the short "i" sound and the emphasis on the last syllable.

AVERAGE RATE OF RETURN Meaning and Definition

1. Average rate of return refers to a financial metric used to measure the profitability or performance of an investment over a specific period. It provides investors with an estimation of the average annual growth rate or rate of return on their investment.

   The average rate of return is calculated by dividing the cumulative returns of an investment by the number of years the investment was held. Essentially, it represents the average gain or loss of an investment on an annual basis.

   This metric is widely used by investors to evaluate the viability of an investment and compare it with other investment options. It helps in determining the effectiveness of an investment strategy and assists in making informed decisions based on historical performance.

   The average rate of return is expressed as a percentage and is useful not only for individuals but also for businesses evaluating investment opportunities or projects. It aids in assessing the profitability and sustainability of a business venture.

   However, it is essential to note that the average rate of return does not take into account the volatility or risk associated with an investment. Therefore, it should be used in combination with other financial ratios or indicators to get a comprehensive view of the investment's performance.