1. What is Rate of Return (ROR)?

The Rate of Return (ROR) is a measure of the profit or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost. It helps investors evaluate the performance of their investments.

2. How Does the Calculator Work?

The calculator uses the ROR formula:

Where:

• Current Value — The current value of the investment
• Initial Value — The original cost of the investment

Explanation: The formula calculates the percentage change in value from the initial investment to the current value.

3. Importance of ROR Calculation

Details: ROR is crucial for comparing investment performance, making investment decisions, and assessing the profitability of different opportunities.

4. Using the Calculator

Tips: Enter the initial investment amount and current value in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good rate of return?
A: A "good" ROR depends on the investment type and risk level. Generally, 7-10% is considered good for stock market investments.

Q2: Can ROR be negative?
A: Yes, a negative ROR indicates a loss on the investment.

Q3: How does ROR differ from ROI?
A: ROR is typically expressed as a percentage and often annualized, while ROI (Return on Investment) can be expressed as either a percentage or absolute value.

Q4: Should I include dividends in current value?
A: Yes, for a complete picture, include all returns (price appreciation + dividends/interest) in the current value.

Q5: How do I annualize ROR for multi-year investments?
A: Use the compound annual growth rate (CAGR) formula: [(Ending Value/Beginning Value)^(1/n)] - 1, where n is number of years.