Chapter 1 Rates of Return on Investment: What Goes In, What Comes Out

Even the most seemingly easy calculation can become quite involved.

For example, what is your “return?” If you invest money in a stock or mutual fund, you need to be able to figure out and compare the outcome; but as the following explanation demonstrates, there are many different versions of “return” and you need to be sure that when comparing two different outcomes, you are making a like-kind study. Otherwise, you can be deceived into drawing an inaccurate conclusion. And accuracy is one of your goals in going to the trouble of drawing conclusions in the first place.

The “return” you earn on your investments can be calculated and expressed in many different ways. This is ...

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