Annual rate of return There are many ways of calculating the annual rate of return. If the rate of return is calculated on a monthly basis, we sometimes multiply this by 12 to express an annual rate of return. This is often called the annual percentage rate (APR). The annual percentage yield (APY), includes the effect of compounding interest.

Annualized holding period return

Annualized holding period return The annual rate of return that when compounded t times generates the same t-period holding return as actually occurred from period 1 to period t.