The expected rate of return is a crucial metric for investors as it represents the anticipated profit or loss on an investment over a specific period. It's a forward-looking estimate, not a guarantee, and is often used to compare different investment opportunities. Calculating the expected rate of return helps investors make informed decisions by quantifying the potential upside of an asset.
There are several ways to estimate the expected rate of return, depending on the available data and the complexity of the model. A common approach involves using historical data, while more sophisticated methods might incorporate economic forecasts, company-specific news, and market sentiment.
#stock-return-calculator {
font-family: sans-serif;
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #ddd;
border-radius: 8px;
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.form-group {
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.form-group label {
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.form-group input {
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button {
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button:hover {
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#result {
margin-top: 20px;
font-size: 18px;
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function calculateExpectedReturn() {
var currentPrice = parseFloat(document.getElementById("currentPrice").value);
var expectedFuturePrice = parseFloat(document.getElementById("expectedFuturePrice").value);
var dividendPerShare = parseFloat(document.getElementById("dividendPerShare").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(currentPrice) || isNaN(expectedFuturePrice) || isNaN(dividendPerShare)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (currentPrice <= 0) {
resultElement.innerHTML = "Current Stock Price must be a positive number.";
return;
}
// Formula for Expected Rate of Return
// E(R) = [(Expected Future Price – Current Price) + Dividends Per Share] / Current Price
var expectedReturn = ((expectedFuturePrice – currentPrice) + dividendPerShare) / currentPrice;
// Format the result as a percentage
var formattedReturn = (expectedReturn * 100).toFixed(2) + "%";
resultElement.innerHTML = "Expected Rate of Return: " + formattedReturn;
}