Cumulative Return
This is the total return an investment has generated, positive or negative, and is expressed as a percentage. It is calculated by (Current value-purchase value) / (purchase value).
Since it does not take time into factor, a high cumulative return may be misleading. 300% sounds pretty impressive until you learn it is the return after 50 years of investment.
Related Terms
- Absolute Return
- Real Rate of Return
- Risk-adjusted return
- Actual Return
- Abnormal Return
- Equity Risk Premium
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