Compound Annual Return
What is a Compound Annual Return?
The compound annual return has to do with the quantity of development that is attained by an investment within a calendar year. Also known as an average annual return, the calculation takes into discussion any and all action involving the investment during the period cited. One of the important functions of calculating the compound annual return is to assess the rate of annual return on a given investment. This can be accomplished by comparing the compound annual return for the most recently completed year with the percentage return of previous years.
Because the calculation of the combine annual return is in the form of a percentage, the figure is also conceived to be helpful in assessing performance during the current uncompleted annual period. By employing the combine annual return as a standard for the current half year, the investor can often spot trends and take appropriate action if market changes or other factors indicate the investment will not perform up to par for the remainder of the current year.
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