The rate of return is typically expressed as:

The rate of return is a measure that indicates the profitability of an investment relative to its initial cost. It is typically expressed as a percentage, which allows for a clear understanding of how much profit—or loss—an investment has generated in relation to the amount initially invested. By calculating the rate of return as a percentage of the initial investment, investors can easily compare the performance of various investments, regardless of their size or dollar amount.

This percentage format helps convey a more comprehensive picture of how well an investment is performing over time or against other investment opportunities. A dollar amount does not provide the same context since it does not take into account the initial investment size; thus, it lacks comparability. A fixed interest rate refers to the terms of a loan or fixed-income investment rather than measuring return on investment, while a comparison to market averages is an analytical approach and does not represent the return itself but rather how an investment stacks up against the broader market. Therefore, expressing the rate of return as a percentage of the investment's initial cost is the most effective way to communicate investment performance.