# What is the difference between the Rate of Return and Interest Rate? What is a good rate of return?

Students are often confused between the Rate of Return and Interest rate. Though most of the time they think both of them are the same or almost the same, both are completely different. Now, we will try to clear confusion regarding the rate of return and Interest Rate.

# Rate of Return

The Rate of return indicates how much return is generated based on the initial investment made. The rate of return is expressed as a percentage and is based on the capital and the annual return, which is the amount earned over the course of a year.

The rate of return on an investment is the percentage of loss or gain generated by an investment. This value is based on the initial investment, or capital, and the amount regained over a certain period, such as one year for an annual rate of return.

Finally, a rate of return is the amount of money you have earned against your investment divided by the investment you have made initially.

Rate of return=[Initial value(Current value−Initial value)​]×100

## What is the Record Date and Ex-dividend Date?

A dividend is approved by the Board of Directors at the Board of Directors meeting. Dividend paid periodically, commonly, monthly, quarterly, or annually to the shareholders whose names were listed in the register at the record date. The percentage of dividends is not permanent, and the board of directors can adjust it periodically. Usually, Shareholders…

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## What is a Double Entry System?

Definition of Double Entry System In 1494 Luca Pacioli, the Italian mathematician first published the principle of the double-entry system. The use of a double-entry system made it possible to record not only cash, but also all sorts of mercantile transactions. The double-entry system of accounting or bookkeeping states that every business transaction must have two accounts and…

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## What is a Regressive Tax Rate?

Definition of Regressive Tax Rate: A regressive tax is a tax which burden falls more heavily on the poor than reach because the tax rate decreases as the income increases. A regressive tax is the opposite of a progressive tax. Under this system, the tax rate reduces as the taxable amount increases. There is an…

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Definition of Mutual Fund A mutual fund is a kind of investment that uses money from investors to invests in stocks, bonds, or other types of investments. This is considered the safest investment because investors invest money depends on market conditions and the calls taken by the fund manager. Though risks remain at every investment,…

## Who is an Underwriter, and what roles of an underwriter?

Definition of Underwriter? The underwriter is an individual or an institution who undertakes the risk associated with a venture, an investment, or a loan in lieu of a premium. Underwriters are found in banking, insurance, and stock markets. Underwriting is one of the most important functions in the financial world wherein an individual or an…

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## What is Net Asset Value Per Share (NAVPS)?

NAVPS ( Net Asset Value Per Share) The Net Asset Value (NAV) represents the net value of the company. To calculate this Net asset to be determined first. The net assets value of the entity is calculated by subtracting the total value of liabilities from the total assets of the company. The results obtained after…

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The interest rate on a loan can be determined by dividing the interest amount paid on a loan over one year by the value of the initial loan amount, or the principal. On the other hand the rate of return can be calculated by subtracting the capital from the return, and then dividing this value by the capital to determine the rate