What Is Normal Rate of Return?

Yield refers to the return on investment, which is generally expressed in annual percentages, and is calculated based on the current market price, face value, coupon rate and time to maturity. For a company, yield refers to the percentage of net profit as a percentage of the average capital used.

rate of return

Rate of return
Rate of return refers to the rate of return on investment.
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The research on the rate of return using data from the mid-to-late 1990s has yielded relatively low values, especially in rural areas. Some studies have even suggested that the role of rate of return in rural China is minimal (Zhao, 1997).
We can't doubt the reliability of the data yet, because most studies use
Measurement method
The research on the rate of return is to reveal the effect of the rate of return on income. As mentioned above, China's rate of return has many differences from the rest of the world. One aspect is that the increasing rate of return is more obvious. Correspondingly, the overall rate of return of the Chinese population is relatively low, especially the proportion of the population with higher levels of returns (universities) is smaller. Then, what effect will this have on income differences? A basic assumption is that if the rate of return is positive or increasing, then if the high-level rate of return is obtained by only a few people, the degree of inequality in the rate of return on income will increase, which will lead to an increase in income inequality. Several studies in recent years have focused on this issue.
The study of China's rate of return not only reveals the changing characteristics of the relationship between the rate of return and income and income distribution, but also further enriches the method of rate of return research and economic theory, such as measurement methods, the changing characteristics of the rate of return and income and many more. In summary, the following basic conclusions are mainly drawn:
1. Based on the data before 1997, China s urban returns are still lower than the world and Asian averages. The results of subsequent studies have approached or started to exceed this level, indicating that China s urban labor market reform is gradually improving.
2. In contrast, the rate of return in rural areas is still relatively low, about 3-4 percentage points lower than in urban areas, especially in recent years, there has been a trend of expansion. The explanation of this phenomenon is caused by the division of labor market and the backward technological conditions of rural production. The low rural rate of return may have a negative impact on the demand for rural residents' rate of return. This conclusion needs further empirical testing.
3. In China, an increasing rate of return has been found. Because this phenomenon may be caused by structural distortions in economic development and distortions in the rate of return investment system, it will cause a further expansion of the income gap, and therefore require Sufficient attention in policy.
4. In other aspects of the rate of return estimation, the rate of return of women is higher than that of men, and the rate of return of western regions is higher than that of eastern regions. The rate of return gradually increases with time.
5. Institutional factors still affect the returns on Chinese residents' return on investment in returns. The relatively weak role of market mechanisms in the allocation of labor resources before the mid-1990s explained the low returns in China during this period.
6. Studies have shown that the rate of return in China's transition period has gradually increased, and the internal mechanism of this change is mainly due to the institutional changes facing market-oriented reforms. Some studies have also found that the aforementioned characteristics of Chinese yields may also increase income inequality.

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