Simple Return
Install and import#
npm install fintech-algorithmsimport { simpleReturn } from "fintech-algorithms/foundations/financial-arithmetic-time-value-and-returns/simple-return";Signature#
simpleReturn(input)Measures the plain percentage gain between a starting and an ending value over one holding period.
Parameters#
| Name | Type | Notes |
|---|---|---|
input | D00Input | A plain object. Every F02 topic first reads principal, rate and periods and validates them before any per-topic branch runs. This topic then reads startValue and endValue, which must both be strictly positive; principal, rate and periods are validated but not used. |
Returns#
{ simpleReturn: number; percentageReturn: number }
simpleReturn is endValue / startValue - 1 as a decimal fraction and percentageReturn is the same number expressed in percent.
Errors#
- When input is not a plain object — throws TypeError
- When principal is negative, periods is negative, or rate is at or below -1 — throws RangeError
- When startValue or endValue is zero or negative — throws RangeError
Complexity: time O(1),
space O(1).
Worked example#
verified This is the worked example published in the article, replayed by the test suite on every run. The output cannot drift.
Input#
{
"principal": 1000,
"rate": 0.05,
"periods": 3,
"compoundsPerPeriod": 12,
"futureValue": 1200,
"cashFlows": [-1000, 400, 400, 400],
"startValue": 100,
"endValue": 110,
"returns": [0.1, -0.05, 0.08],
"frequency": 12,
"periodicReturn": 0.01
}Call#
simpleReturn(input)Returns#
object with 2 fields: simpleReturn, percentageReturn
{
"simpleReturn": 0.10000000000000009,
"percentageReturn": 10.000000000000009
}Diagrams#
Calculation flow#
Simple Return — four-part map
flowchart LR
A["Name the input"] --> B["Apply: total return = (ending value + cash received - starting value) / starting value"]
B --> C["Check units and boundary"]
C --> D["Explain the output"]
How it works#
This page states the contract — how to call it correctly. The article explains the concept: why it works, and where it breaks.
References#
- INVESTOR_RETURN - Annual Return — U.S. Securities and Exchange Commission
- CFA_QM - CFA Institute Quantitative Methods Study Session — CFA Institute
- Author-derived and synthetic boundary