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The term yield can mean many things in different situations. Its computation is different for bonds and different for stocks. Even with bonds only, there are two different types: current yield and yield to maturity (or to call). It is also frequently used as a substitute for the term Total Return. Assuming however that you are interested in evaluating a performance of a portfolio of different assets (stocks, options, bonds, etc.), Yield would most probably refer to Internal Rate of Return, and Total Return to Time Weighted Rate of Return. IRR takes into account effects created by inflows or outflows of money, while TWRR eliminates those effects. Thus, if your money manager or broker shows you a comparison of your portfolio's performance to market indices, he or she definitely shows you TWRR compared to an index's total return. If you can get hold of annualized IRR of your portfolio of assets, and probably not many mangers will be willing to provide you with this information (this cannot be compared to Dow Jones Industrial Average or other market indices), you can compare this with different available to you investment, e.g., what rate you would get if investing in your bank's CDs. Computation of both is quite complicated and usually involves special computer software. The interpretation of, for example, 5% annual TWR is simple - every dollar invested a year ago will bring you 25 cents. 5% of annual IRR shows you at what rate your every dollar was invested independently from when it was added to your account. It is similar to a bank's APR shown for your checking account.
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How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
What is the expected rate of return on investment for this opportunity?
The expected rate of return on investment for this opportunity is the anticipated percentage increase in value or profit that an investor can expect to receive from their investment.
What is the difference between the required rate of return and the expected rate of return in investment analysis?
The required rate of return is the minimum return an investor needs to justify the risk of an investment, while the expected rate of return is the return that an investor anticipates receiving based on their analysis of the investment's potential performance.
How does opportunity cost enter in to the make or buy decision?
The opportunity cost of a business decision is the value of the potential benefit of the next best opportunity foregone.For example, if I have one £100 to invest, and I can invest in project A, which will return me a profit of £300 or project B, which will return a profit of £150, then I will choose project A. The total cost of the project is:Cost of investment + opportunity cost = £100 + £150 = £250.The £150 in the above formula is the profit I would have made from the next best option for my investment (ie, project B).Since the total cost of my project (£250) is less than my profit (£300), then I have made the right decision. If I had chosen project B for my investment, my total cost would be (100+300=)£400, which is less than the profit of £250, and so I know I have made the wrong decision.In deciding how best to maximise return on capital, one must always consider the opportunity cost of one's investment. It is important to remember that there is always the alternative of simply investing one's money in the bank, earning nominal interest (say 5%). If the expected returns are not above this rate, then total cost (including opportunity cost) will exceed the return on investment and so the potential investment should not be made.
What is the formula to calculate the annual return based on the daily return of an investment?
To calculate the annual return based on the daily return of an investment, you can use the formula: Annual Return (1 Daily Return)365 - 1.
Formula for average rate of return?
Average rate of return=Average profit /Initial investment*100% or ARR=Average profit /Average investment*100% or ARR=Total profit /Initial Investment*100%
How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
Return On Investment in fmcg?
Return on investment is the amount that you get back for investing in something. The formula is ROI=(Profit *100)/(Investment * number of years.)
What is business performance management?
Return on investment
What is the difference between rate of return and return on investment?
The rate of return is a percentage that shows how much an investment has gained or lost over a specific period, while the return on investment is a ratio that compares the profit of an investment to its cost.
What is the expected rate of return on investment for this opportunity?
The expected rate of return on investment for this opportunity is the anticipated percentage increase in value or profit that an investor can expect to receive from their investment.
How do you know when an investment is successful?
An investment is considered successful when it generates a positive return on investment (ROI). This means that the income or profits generated from the investment exceed the initial cost. It is also important to compare the investment's performance to relevant benchmarks and industry standards to determine if it is outperforming its peers. Additionally, the investment should align with the investor's goals and risk tolerance.
What is the difference between returns and profit?
return is calculate against investment. profit is calculte against cost.
What is the difference between profit and yield?
Profit refers to the financial gain made from a business transaction after all expenses have been deducted. Yield, on the other hand, typically refers to the return on an investment, usually expressed as a percentage. While profit is a measure of actual earnings, yield is a measure of the return on investment relative to the initial investment.
Return on Investment is composed of what two ratios?
Profit margin and asset turnover
What are explanation of maximization of shareholders profit?
explain how to make the most money (profit) for stock owners of a company. A return on their investment.
What are profit and investment centres?
Profit centres are measures of divisional performance. The performance measure is of course profit. The manager has the knowledge to set the correct prices and quantities as well as product mix. Investment centres are similar to profit centres but they have additional decision rights in terms of capital expenditure and investment. The manager is assumed to have better knowledge of input and output markets but also investment opportunities.
