Ch.10 · Risk Measures and Ratios · medium
What is CAGR (Compound Annual Growth Rate) and when is it used?
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EXPLANATION
CAGR is the smoothed annualised growth rate that would produce the same end result as the actual investment if compounded at a constant rate. Formula: CAGR = (End Value / Start Value)^(1/n) - 1, where n = years. It is the standard measure for mutual fund returns over periods greater than 1 year as it accounts for compounding.
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