How the Money Portfolio calculates Gain, Market Value, and Cost Basis (176334)

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Percent Gain

Percent Gain can be expressed as the following:

          Gain
 Gain % = ----------
          Cost Basis
				

Gain

Gain is defined as: The profit or loss on a security or portfolio expressed in dollars; Equal to income plus price appreciation.

Income

Income is defined as: Interest, dividends, and capital gains distributions that you have received for an investment.

Price Appreciation

Price Appreciation is defined as: How much an investment has appreciated in price. It is computed as market value less cost basis. If "show sold securities" is enabled, it also includes realized gains.

Market Value

Market Value is defined as: The current value of an investment as indicated by the latest trade recorded.

Cost Basis

Cost Basis is defined as: The total cost of all shares of an investment. Note that this includes commissions and the cost of any reinvest transactions.

For example, if you bought $5,000 worth of Mutual Fund A (500 shares at $10 per share), and it has since paid a dividend of $500 that you have reinvested, you would use the following formula to calculate your gain percentage (assuming that the price is still $10 per share): There are theoretical justifications for dividing by cost basis as MSN Money Investing does or by the original cost that does not include reinvestments. Neither one is right or wrong, and both methods can lead to unexpected results.

The annualized return column is a better way to assess your return. This method uses the internal rate of return calculation to infer the investment return.

For more information, click the following article number to view the article in the Microsoft Knowledge Base: