Required Return

Description of Required Return. Explanation.

Definition Required Return. Description.

Required Return is the minimum expected return which is required from an investment to decide to go ahead with it.

It is the minimum return required by investors to compensate them for assuming the risk that is associated with an investment. Normally it is expressed as a percentage.

For example, if you invest in a security X, your may want a return of 9% per year, because you believe that if you don't receive 9% return, then you'd be doing something else with your money, like buying a new stereo or an alternate security Y with a lower perceived risk or with a higher potential return.

Compare with: WACC  |  Internal Rate of Return  |  Net Present Value  |  Feasibility Study  |  Risk Management  |  Strategic Risk Management  |  Credit Rating  |  Value at Risk  |  Required Rate of Return

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing

More on Management  |  Return to Management Dictionary  | 

End of description Required Return. An explanation.