Rate of return
The increase in the value of an asset expressed as a proportion of the asset’s initial value over a given time period (the ‘holding period’). For example, if a share costs £2.00 to purchase and a year later is worth £2.10, the return over the holding period of a year is (2.10 – 2.00)/2.00 = 0.05. A rate of return can be calculated before or after the deduction of tax, and over any length of holding period. See also internal rate of return; required rate of return.
Reference: Oxford Press Dictonary of Economics, 5th edt.