Page 17 - DBP5043

CONCEPT OF RETURN

What is Return ?

Return, in finance, simply means the reward for investing. Return consists
of periodic cash payments or current income and capital gains (losses)
or increase (decrease) in market value. The periodic cash payments
maybe in the form of interest or dividends. In other words, return can be
referred to as total income obtained on an investment plus any changes
in market prices (usually shown in %).

Classification of Return:

Return in finance simply means the reward for investing. Return consists of
periodic cash payments of current income and capital gain (losses) or
increases (decreases) in market value

actual return that has been earned @ obtained.
realized
return
realized return is historical in nature

risk free rate of return- reward for deferring
consumption. required rate of return for riskless
classification investments such as investment in government

Of required securities
return
return risk premium- additional return that we anticipate for
assuming risk. as level of risk increase, we would
demand an additional expected return

expected the return is anticipated or expected . expected
return benefit or earnings that the investment would
generate. target return that the firm may desire