ANNUAL RETURN Meaning and
Definition
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Annual return refers to the percentage gain or loss achieved by an investment over a one-year period. It is a measure used to assess the performance and profitability of an investment over a specific time frame. The annual return is typically expressed as a percentage and is calculated by dividing the difference between the final and initial values of an investment by the initial value, multiplied by 100.
The annual return provides important information to investors as it allows them to evaluate the effectiveness of their investment strategy. It helps in comparing the performance of different investments and determining which ones have generated higher or lower returns. Additionally, it enables investors to assess the overall growth or decline of their investment portfolio.
This term is predominantly used in the context of financial markets and investments, including stocks, bonds, mutual funds, and other securities. Investors and financial analysts rely on the annual return to make informed decisions about their investment allocations and to gauge the profitability and risk associated with different assets.
The annual return is an essential tool for considering the historical data of an investment and projecting potential returns in the future. Although annual return is a useful performance indicator, it is important to note that it is just one factor to consider, and investors should also take into account factors such as risk, volatility, and market conditions when making investment decisions.
Common Misspellings for ANNUAL RETURN
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- annyal return
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- annuzl return
- annusl return
Etymology of ANNUAL RETURN
The word "annual" originates from the Late Middle English word "annuel" or "annuelly", which was derived from the Latin word "annuālis". "Annŭus" in Latin means "of a year" or "annually".
The term "return" comes from the Old French word "retourner", derived from the Latin word "retornāre". It combines the prefix "re-" meaning "again" and "tornāre", meaning "to turn". Hence, "return" refers to going back or coming again.
When combined, the term "annual return" refers to the yearly or recurring comeback or restoration. In finance or investing, it typically relates to the profit or loss generated by an investment in a particular year.
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