What term refers to the annual percentage increase in the value of an investment?

The term that accurately refers to the annual percentage increase in the value of an investment is the annual growth rate. This metric is specifically designed to express how much an investment grows on a yearly basis, allowing investors to compare the performance of different investments over time. The annual growth rate provides a clear and standardized way to measure growth, ensuring that stakeholders can easily assess the effectiveness and profitability of their investments.

Understanding the annual growth rate is essential for investors who want to track progress, set future financial goals, and make informed decisions based on historical performance. It reflects how well an investment has performed within a given timeframe and is often expressed as a percentage, giving a straightforward representation of growth.

In contrast, other terms such as Return on Investment (ROI) or Yield Rate serve different purposes in financial analysis. ROI measures the overall profitability of an investment relative to its cost, while Yield Rate typically refers to the income generated from an investment relative to its current value or cost. Cumulative growth rate, on the other hand, focuses on the total growth over a specific period but does not express it on an annualized basis. Therefore, the annual growth rate is the most suitable and accurate term for describing the annual percentage increase in investment value.