Section 2
Understanding Returns
Book
Version 3
By Boundless
By Boundless
Boundless Finance
Finance
by Boundless
5 concepts
Reporting
When accounting for capital gains and losses in the securities market, understanding reporting responsibilities and potential reductions is critical.
Dollar Returns
The dollar return is the difference between the final value and the initial value in nominal terms.
Percentage Returns
Percentage returns show how much the value of the investment has changed in proportion to the size of the initial investment.
Historical Returns: Market Variability and Volatility
Markets and securities may follow general trends, but exogenous factors (such as macroeconomic changes) cause variability and volatility.
Calculating and Understanding Average Returns
Average returns are commonly found using average ROI, CAGR, or IRR.