What "rate of return" means in finance

Rate of return refers to the profit or loss generated by an investment over a specified period of time, expressed as a percentage of the initial investment. It is a measure of the performance of an investment and provides an indication of how much money an investor has gained or lost from investing in a particular asset or portfolio. It takes into account both the capital gains and the income earned from an investment, such as dividends or interest, and is typically calculated annually.