What is Rate of Return (RoR)?

Define (RoR) In Simple Terms

The rate of return, or RoR, is the net gain or loss on an investment over a period of time.

It is expressed as a percentage of the principal of the investment.

Calculating the rate of return gets the percentage change from the beginning of the period to the end.

Formula for Calculating (RoR)

The formula for calculating simple rate of return is as follows:

Simple rate of return is sometimes called the basic growth rate or return on investment.

Example of (RoR)

For example, say that an investor purchased a short-term bond, such as a US Treasury Bill, for $950 and redeemed it for its face value of $1000 at maturity.

This bond would have a rate of return $50 / $1000, or 5%.

Alternatively, say an investor purchases 100 shares of a company for $50 each.

The next year, they sell each share for $60 apiece.

They also earned $100 in dividends. The rate of return would be:


Rate of return doesn’t only apply to securities. 

Any asset that has a cost to purchase and will produce income at some point in the future, from selling or otherwise, has a calculable rate of return. 

Rate of Return (RoR) Definition FAQs

RoR stands for the rate of return in finance.
The rate of return, or RoR, is the net gain or loss on an investment over a period of time.
The formula to calculate the rate of return is: ((current value-orginal value)/original value)*100
For example, say that an investor purchased a short-term bond, such as a US Treasury Bill, for $950 and redeemed it for its face value of $1000 at maturity. This bond would have a rate of return $50 / $1000, or 5%.