Rate of Return

Rate of Return on an asset for a given period (usually a period of one year) is defined as.

Illustration:

Price at the beginning of the year                     : Rs.75

Dividend paid at the end of the year                : Rs.3

Price at the end of the year                                  : Rs.90

Therefore the rate of return on this stock is

This rate of return may be broken down as follows

Thus we have 4 % current yield and 2% capital gains yield.