# Return

Return is all income - including dividends, appreciation and interest - generated by an investment or asset over a specified time period and can be expressed as a total or net figure. Returns relative to the cost of investment can be measured by a range of calculations depending on the industry, although return on investment is probably the most common.

Return can be calculated in several ways including total return, which records all income including appreciation, dividends and interest and net return, which subtracts all the expenses generated by the return including taxes.

## Everything's Relative[edit]

Return on investment (ROI) is a popular measure of investment performance because it is considered both versatile and simple. It is usually calculated by dividing the investment's return by its cost, usually expressed as a percentage or a ratio.^{[1]} However, ROI can be misleading if the investor doesn't know exactly how the inputs were defined or calculated.

More complicated is the Cumulative Abnormal Return (CAR), which records the additional return an investment returned above that expected by market movements only. It is often used in takeover studies where shareholders are paid a premium when their company is taken over.^{[2]}

## References[edit]

- ↑ Return On Investment - ROI. Answers.com.
- ↑ Definition of Cumulative Abnormal Return (CAR). Financial Terms.