Required Rate Of Return

The rate of return needed to induce investors or companies to invest in something.

Investopedia Says:
For example, if you invest in a stock, your required return might be 10% per year. Your reasoning is that if you don't receive 10% return, then you'd be better off paying down your outstanding mortgage, on which you are paying 10% interest.

Related Links:
Learn how the expected extra return on stocks is measured and why academic studies usually estimate a low premium. The Equity Risk Premium - Part 1
See the model in action with real data and evaluate whether its assumptions are valid. The Equity Risk Premium - Part 2
We look at how to forecast long-term returns on the three major asset classes. Projected Returns: Honing The Craft

Return required by investors before they will commit money to an investment at a given level of risk. Unless the expected return exceeds the required return, an investment is unacceptable. See also Hurdle Rate; Internal Rate of Return; Mean Return.