The nominal rate of return is a measure of the change (gain or loss) of an investment in absolute terms over a period of time. It is expressed as a percentage.

When investors speak of returns, they are generally speaking of the nominal rate of return. But it is important to note that the nominal rate of return does not consider external factors such as inflation, taxes, or fees.

The nominal rate of return is calculated with the following formula:

Nominal rate of return = (current value – previous value) / previous value * 100%