2006-10-05 18:01:13 · 6 answers · asked by jamesbrown2882 1 in Business & Finance ➔ Investing
It's the rate of return in a one year period.
You might buy a cd for 12% for 5 months. As such, you'll only earn about 5% on your money since it was only held for 5 months. However, your annualized return will be 12+% since if you did have the cd for a whole year, that's what it would earn.
Make sense? Hope that helps!
2006-10-05 18:07:20 · answer #1 · answered by Yada Yada Yada 7 · 2⤊ 0⤋
When you let a bank save your money they will quote an interest rate.
But the money they pay will not be the same as what the interest rate would come to. So there is a difference & they call that the annualized return. It will be a little less.
They do the same sort of thing with loans, Only the difference that you pay would be a little more.
Interest may be paid on the basis of 30 day months. (360 Days per year)
2006-10-05 18:15:25 · answer #2 · answered by Floyd B 5 · 0⤊ 0⤋
GO TO: http://www.styleadvisor.com/support/statistics/annualized_return.html
Annualized Return
The annualized return is the geometric mean of the returns with respect to one year. If we denote by NumYears the number of years covered by the returns, the formula becomes:
AnnRtn(r1, ..., rn) =
where r1, ..., rn is a return series, i.e., a sequence of returns for n time periods.
2006-10-05 19:06:42 · answer #3 · answered by Planet Progress 3 · 0⤊ 1⤋
Hi, i suggest a great site with plenty of Issues related to your Investing and everything around it. it also provide clear and accurate answer to many common questions.
I am sure that you can get your answers in this website.
http://investing.sitesled.com/
Good Luck and Best Wishes!
2006-10-06 01:31:42 · answer #4 · answered by stock.trade 1 · 0⤊ 0⤋
The yearly increase (or decrease) in the value of an investment, including the effects of compounding.
2006-10-05 18:06:49 · answer #5 · answered by errant_hero 4 · 0⤊ 0⤋
How much you made that year in profit.
2006-10-05 18:04:14 · answer #6 · answered by Jason 6 · 0⤊ 0⤋