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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Accounting Rate Of Return

Definition:

Accounting Rate of Return (or ARR, just like a pirate, matey) is the amount of profit (also known as return) you can expect to make on an investment.

You can use the ARR to compare investments and see which one will make you the most moolah over time.

One word of caution: the ARR is pretty basic and it does not take inflation into consideration, so it's up to you to keep in mind that if you're making $100 a year from an investment, the $100 you earn this year is going to be worth a lot more than the $100 you earn on that same investment ten years from now.