Average Rates of Return

Average Rate of Return is a financial metric used to measure the profit or loss of an investment over a specified period, expressed as a percentage of the initial investment cost. It is calculated by taking the sum of all yearly returns and dividing it by the number of years.

This figure provides investors with a simplified view of how an investment has performed on average each year, smoothing out the fluctuations that may occur from year to year in the actual rate of return.