|Expected return on investment|
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Definition of Expected return on investment
Expected return on investment
The return one can expect to earn on an investment. See: capital asset
Part of the return that is not due to systematic influences (market wide influences). In
Absolute Right of Return
Goods may be returned to the seller by the purchaser without restrictions.
Accounting rate of return (ARR)
A method of investment appraisal that measures
accounting rate of return (ARR)
the rate of earnings obtained on the average capital investment over the life of a capital project; computed as average annual profits divided by average investment; not based on cash flow
After-tax real rate of return
Money after-tax rate of return minus the inflation rate.
The fund return, for any 12-month period, including changes in unit value and the reinvestment of distributions, but not taking into account sales, redemption, distribution or other optional charges or income taxes payable by any unitholder that would reduce returns.
Annualized holding period return
The annual rate of return that when compounded t times, would have
Arithmetic average (mean) rate of return
Arithmetic mean return.
Arithmetic mean return
An average of the subperiod returns, calculated by summing the subperiod returns
Average accounting return
The average project earnings after taxes and depreciation divided by the average
Average rate of return (ARR)
The ratio of the average cash inflow to the amount invested.
book rate of return
Accounting income divided by book value.
Book yield is the investment income earned in a year on a portfolio of assets purchased over a number of years and at different interest rates, divided by the book value of those assets.
Business Expansion Investment
The use of capital to create more money through the addition of fixed assets or through income producing vehicles.
capital investment analysis
Refers to various techniques and procedures
Money used to purchase fixed assets for a business, such as land, buildings, or machinery. Also, money invested in a business on the understanding that it will be used to purchase permanent assets rather than to cover day-to-day operating expenses.
CARs (cumulative abnormal returns)
a measure used in academic finance articles to measure the excess returns an investor would have received over a particular time period if he or she were invested in a particular stock.
Cumulative abnormal return (CAR)
Sum of the differences between the expected return on a stock and the
Dividend reinvestment plan (DRP)
Automatic reinvestment of shareholder dividends in more shares of a
The return realized on a portfolio for any evaluation period, including (1) the change in market
Dollar-weighted rate of return
Also called the internal rate of return, the interest rate that will make the
Through equity investment, investors gain part ownership of the corporation. The primary type of equity investment is corporate stock.
Ex post return
Related: Holding period return
The expected return of a portfolio based on the expected returns of its component assets and
Excess return on the market portfolio
The difference between the return on the market portfolio and the
Also called abnormal returns, returns in excess of those required by some asset pricing model.
a short-run concept that represents the
Expected future cash flows
Projected future cash flows associated with an asset of decision.
Expected future return
The return that is expected to be earned on an asset in the future. Also called the
The return expected on a risky asset based on a probability distribution for the possible rates
The total amount of money (return) an investor anticipates to receive from an investment.
Expected return-beta relationship
Implication of the CAPM that security risk premiums will be
standard set at a level that reflects what
The weighted average of a probability distribution.
The value of the possible outcomes of a variable weighted by the
Expected value of perfect information
The expected value if the future uncertain outcomes could be known
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Future investment opportunities
The options to identify additional, more valuable investment opportunities
Geometric mean return
Also called the time weighted rate of return, a measure of the compounded rate of
guaranteed investment certificate (GIC)
A GIC is an investment that gives you a guaranteed rate of return over a fixed period of time, usually between 30 days and 5 years. GICs are available from banks, trust companies, and other financial institutions.
Guaranteed investment contract (GIC)
A pure investment product in which a life company agrees, for a
Holding period return
The rate of return over a given period.
Total return over a given horizon.
Incremental internal rate of return
IRR on the incremental investment from choosing a large project
Internal rate of return
Dollar-weighted rate of return. Discount rate at which net present value (NPV)
Internal rate of return
a. The average annual yield earned by an investment during the period held.
Internal rate of return
The rate of return at which the present value of a series of future
Internal rate of return (IRR)
A discounted cash flow technique used for investment appraisal that calculates the effective cost of capital that produces a net present value of zero from a series of future cash flows and an
internal rate of return (IRR)
The precise discount rate that makes the
Internal Rate of Return (IRR)
The discount rate that equates the present value of the net cash
internal rate of return (IRR)
the expected or actual rate of
internal rate of return (IRR)
Discount rate at which project NPV = 0.
Inventory returned from a customer for any reason. This receipt
The commitment of funds (capital) in anticipation of an increased
Related: financial analysts
Financial intermediaries who perform a variety of services, including aiding in the sale of
Middleman between a corporation issuing new securities and the public. The middleman buys the securities issue outright and then resells it to customers. Also called an underwriter.
a responsibility center in which the manager
A division or unit of an organization that is responsible for achieving an adequate return on
a judgment about which assets will be
Decisions concerning the asset side of a firm's balance sheet, such as the decision to
Bonds rated Baa or above by Moody’s or BBB or above by Standard & Poor’s.
Investment grade bonds
A bond that is assigned a rating in the top four categories by commercial credit
The revenue from a portfolio of invested assets.
Also called a portfolio manager and money manager, the individual who manages a
Investment product line (IPML)
The line of required returns for investment projects as a function of beta
Expenditures on capital goods including new housing. Financial ''investments" and sales of existing assets are not included.
Investment tax credit
Proportion of new capital investment that can be used to reduce a company's tax bill
Investment Tax Credit
A reduction in taxes offered to firms to induce them to increase investment spending.
A closed-end fund regulated by the investment Company Act of 1940. These funds have a
As a discipline, the study of financial securities, such as stocks and bonds, from the investor's
investments that a regulated entity is permitted to make under the rules and regulations
Leveraged required return
The required return on an investment when the investment is financed partially by debt.
The return on the market portfolio.
Money rate of return
Annual money return as a percentage of asset value.
Multiple rates of return
More than one rate of return from the same project that make the net present value
Mutually exclusive investment decisions
investment decisions in which the acceptance of a project
Gross, or total, investment minus depreciation.
investment spending minus depreciation.
Net present value of future investments
The present value of the total sum of NPVs expected to result from
Passive investment management
Buying a well-diversified portfolio to represent a broad-based market
Passive investment strategy
See: passive management.
Portfolio internal rate of return
The rate of return computed by first determining the cash flows for all the
the process of gathering information
A contra account that reduces purchases by the amount of items purchased that were subsequently returned.
qualified investments (Canada)
Qualified investments is the term used for investments that can be held in an RSP. These investments generally include:
rate of return
Total income per period per dollar invested.
Rate of Return
return on invested capital (calculated as a percentage). Often an investor has, as one of their investment criteria, a minimum acceptable rate of return on an acquisition.
RATE OF RETURN ON STOCKHOLDERS’ EQUITY
The percentage return or profit that management made on each dollar stockholders invested in a company. Here’s how you figure it:
RATE OF RETURN ON TOTAL ASSETS
The percentage return or profit that management made on each dollar of assets. The formula is:
Rate of return ratios
Ratios that are designed to measure the profitability of the firm in relation to various
The return that is actually earned over a given time period.
Regular Investment Plan (RIP)
A plan under which you may make regular deposits of the same amount to your Mutual Funds account once a month, once every 2 weeks, or once a week. You can also make regular deposits up to four times a month on any dates you choose.
an assumption made about the rates of return that will be earned by intermediate cash flows from a capital project; NPV and PI assume reinvestment at the discount rate; IRR assumes reinvestment at the IRR
The rate at which an investor assumes interest payments made on a debt security can be
The risk that proceeds received in the future will have to be reinvested at a lower potential
REIT (real estate investment trust)
Real estate investment trust, which is similar to a closed-end mutual
REMIC (real estate mortgage investment conduit)
A pass-through tax entity that can hold mortgages
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