**Synonyms:**Compound annual return, Compounded return, Annualized Return

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An annualised return is an investment's return over a certain period, converted to an annual rate. The most simplistic way of doing this is to multiply the return from a period e.g. 4% during a quarter, by the number of times that period occurs in a year e.g. 4 times 4% = 16%. Another more accepted method is to generate a compounded growth rate, in this way you still use the number of periods, however you need to use the following formula Ra = (1+Rp)^t where Ra is the annualised return, Rp is the return from the period, and t is the number of compounding periods; using the same numbers from the previous example - Ra = (1+0.04)^4 = 16.986%. Using an annualised return can be useful for getting an indication of what the overall return for the year might be if performance continues at the same level - however this is often an erroneous assumption.

**Synonyms:** Compound annual return, Compounded return, Annualized Return

**Comments?**

If you have any further questions or would like to add to the entry above, then please submit your thoughts below.

If you have any further questions or would like to add to the entry above, then please submit your thoughts below.

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