A fixed annual return on an investment is known as what?

A fixed annual return on an investment is referred to as an annuity because it represents a series of equal payments made at regular intervals over time. In the context of investments, an annuity is commonly structured to provide a steady stream of income, typically in the form of regular payments that could signify the return on principal invested, plus interest earnings, as a predictable cash flow.

For instance, an individual might purchase an annuity as part of their retirement planning strategy, ensuring they receive predetermined payments annually, which helps with budgeting and financial planning. Annuities can vary in terms of duration and structure, but the key feature is the regular, fixed amount received, distinguishing them from other financial terms.

Other terms such as interest rate and dividend refer to different financial concepts. The interest rate pertains to the cost of borrowing or the return on savings, while dividends are payments made to shareholders from a company's profits, which can be variable and are not necessarily fixed in amount. Capital gain refers to the increase in the value of an investment over time, resulting from its selling price being higher than its purchase price, not a fixed return.