Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• ANNUALIZED RETURN
  
  The yearly increase (or decrease) in the value of an investment, including the effects of compounding. Annualized returns are a bit more complicated than average returns, which you can get by adding up the annual returns of a stock or fund and dividing by the number of years. Securities that have the same average return may have very different annualized returns, especially if one security is volatile. For example, it's possible for a stock or fund to have a respectable average return but a negative annualized returned if gains in the first two years are offset by a big drop in the third.
  
  Back