How to Calculate the Rate of Return: Definition, Formula & Example


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question 1 of 3

How would you define the rate of return?

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1. Karen bought her house in 1974 for $85,000. In 2016, it was worth $750,000. What's the rate of return on Karen's investment?

2. Which of the following is NOT a benefit in knowing the rate of return of an investment?

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About This Quiz & Worksheet

An important aspect of making an investment is an accurate accounting of the rate of return. The worksheet/quiz duo for this lesson will help you to learn more about how to properly calculate the rate of return.

Quiz & Worksheet Goals

These lesson resources test you on these aspects of rate of return:

  • A definition
  • Advantages and benefits
  • Essential numbers in calculating
  • Initial investment

Skills Practiced

This quiz and worksheet will assess the following skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on calculating the rate of return
  • Information recall - access the knowledge you've gained regarding the advantages and benefits of knowing the rate of return
  • Making connections - use understanding of the concept rate of return to recognize its impact on investment decisions

Additional Learning

Get all the facts concerning rate of return by reviewing the lesson How to Calculate the Rate of Return. Work on the following objectives with this lesson:

  • Discover the advantages and benefits to knowing the rate of return
  • Know what numbers are vital in the calculation
  • Discover the rate of return formula