# What Is Rate of Return (RoR)? ### Reviewed by Editorial Team

Updated on March 11, 2023

## 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 FAQs 