Question

What is the difference between rate of return and interest rate

Answer 1

The difference between rate of return and interest rate is based on the nature of returns on investments and interest paid on a loan or deposit. Rate of return refers to a value that indicates how much return is generated based on the initial investment made, also called the capital/ principle.

Answer 2

The difference between rate of return and interest rate is based on the nature of returns on investments and interest paid on a loan or deposit.

Rate of return refers to a value that indicates how much return is generated based on the initial investment made, also called the capital/ principle. This rate is expressed as a percentage and is based on the capital and the annual return, which is the amount earned over the course of a year.

The rate of return on an investment is the percentage of loss or gain generated by an investment. This value is based on the initial investment, or capital, and the amount regained over a certain period, such as one year for an annual rate of return.

An interest rate is indicative of the amount of interest that has to be paid on a loan or will get from a deposit. It has nothing to do with any gain or loss made on an investment.

When someone takes out a loan or invests in a deposit, he or she is typically presented with the annual interest rate, which indicates payment to be made or received respectively!!!