Modern Finance AnnualizeReturn

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AnnualizeReturn

Converts a return per period to a yearly return by compounding, not multiplying.

Syntax

AnnualizeReturn( periodReturn, frequency )

Examples

#import "std/money"
using money

'' GEOMETRIC: ( 1 + r )^f - 1, NOT r * f.  Both are one-liners and the
'' wrong one appears in a great deal of published code, which is why this
'' is a named function rather than left inline.
print AnnualizeReturn( 0.01, RETURN_MONTHLY )            '' 0.1268250301319697
print AnnualizeReturn( 0.0, RETURN_MONTHLY )             '' 0

'' Annual frequency is the identity.
print AnnualizeReturn( 0.07, RETURN_ANNUAL )             '' 0.07000000000000001

'' It is always MORE than the naive product, because gains compound.
dim as boolean compounds = ( AnnualizeReturn( 0.01, RETURN_MONTHLY ) > 0.12 )
print compounds                          '' true

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Library: Finance
Category: Finance
Documented under: Nothing Becomes A Keyword
Source: pkg/std/money/finport.tiko in the tiko repository.