1. What is the Rate of Return (RoR)?

The Rate of Return (RoR) is a percentage that measures the gain or loss of an investment relative to its initial value over a specific period, typically expressed as a percentage. It helps investors evaluate the performance of their investments.

2. How Does the Calculator Work?

The calculator uses the RoR formula:

Where:

• \( CV \) — Current Value of the investment ($)
• \( IV \) — Initial Value of the investment ($)

Explanation: The formula calculates the percentage change in value from the initial investment to the current value, providing a clear measure of investment performance.

3. Importance of RoR Calculation

Details: Calculating RoR is essential for comparing investment performance, making informed financial decisions, and assessing the profitability of different investment opportunities over a 3-month period.

4. Using the Calculator

Tips: Enter the initial investment value and current value in dollars. Both values must be positive numbers, with the initial value greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What does a negative RoR indicate?
A: A negative RoR indicates a loss on the investment, meaning the current value is less than the initial investment.

Q2: How is RoR different from annualized return?
A: RoR measures return over the actual period, while annualized return projects the return to a yearly basis for comparison.

Q3: Can RoR be used for any time period?
A: Yes, RoR can be calculated for any period, but this calculator is specifically designed for 3-month investments.

Q4: Does RoR account for additional investments or withdrawals?
A: No, the basic RoR formula only considers the initial and final values without accounting for cash flows during the period.

Q5: What is considered a good 3-month RoR?
A: This varies by market conditions and investment type, but generally a positive return that outperforms relevant benchmarks is considered good.