The absolute benefit (dollar gain) an investor receives from an investment over a period of time. If expressed as a percentage, it is typically called a rate of return. For example, if an individual invests $100 in a fund. At the end of investment horizon, he gets $150 back. In absolute terms, his return is:

Dollar return = ending investment value – beginning investment value

Dollar return = 150 – 100

Dollar return = 50

Taking this dollar return (absolute gain) and dividing it by initial investment gives us the rate of return or the return expressed as a ratio:

Rate of return = (50/ 100) × 100 = 50%

Therefore, this represents a gain over the period equal to a half of the original investment. In practical uses, the rate of return is more popular than the dollar/absolute return for several reasons (see: role of rate of return in representing investment performance).