A Performance Measure quantifies money returned to an investor for a given asset. The following list summarizes the common Performance Measures:
- Yield = Interest + Dividends; similarly, Net Investment Income = Interest + Dividends – operating expenses [relevant for Mutual Funds]
- Purchase Value = Principal = Price x Quantity + Commissions
- GL = Gain/Loss = Sale Value – Purchase Value
- Total Return = Yield + GL
- %Return = Total Return / Purchase Value x 100
- TIME FACTORS
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- Rate of Return = %Return/ time period (like “Annualized Rate of Return”)
- Time-Weighted Return – adjusts each period for deposits & withdrawals (inflows/outflows)
- Annualized Rate of Return = %Return/ Year
- INFLATION AND TAX FACTORS
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- Inflation-Adjusted or Real Return = Rate of Return – CPI [Consumer Price Index]; similarly, Real Gross Domestic Product = GDP - CPI
- Tax-Equivalent Yield = Tax-Exempt Yield / (100 - Tax Bracket)
