How to calculate returns?
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Table of Contents : Middlemen in the Market 1. Public Limited company(PLC) 2. How does the stock market operate? 3. What makes the stock price move? 4. How do people buy and sell the stock the stock get traded? 5. What occurs once one acquires stock? 7. Where do you fit in the market? |
To calculate returns
If your trade makes a good return, all your past stock market mistakes will be forgotten. Most of the time, returns are given in terms of yearly yield. You need to know about the different types of returns. The steps below will help you understand what they are and how to figure them out.
Absolute Return:
This is the exact amount of money that your trade or business makes. This answer helps you answer the question: I got TCS at 3030 and sold it at 3550. What kind of percentage return did I get?
To figure it out, multiply [Ending Period Value / Starting Period Value – 1] by 100.
i.e. [3550/3030 -1] *100
= 0.1716 * 100
= 17.16%
17.6% is a pretty good return!
Compounded Annual Growth Rate (CAGR):
CAGR measures the annual growth rate of an investment over a specified period, assuming compounding. It is calculated using the following formula:
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