CUET Preparation Today
Choose the correct statement about CAGR (compound annual growth rate)? |
CAGR is the average annualized return of an investment. CAGR is calculated by taking arithmetic mean of series of returns. CAGR is linear measure that does not account for the effects of compounding. CAGR is calculated by using the final and beginning value of an investment. |
CAGR is the average annualized return of an investment. |
The correct answer is Option (1) → CAGR is the average annualized return of an investment. ** Statement (A) is correct: CAGR is the average annualized return of an investment over a period. Statement (D) is also correct because CAGR is computed from the beginning value $V_0$, the ending value $V_n$, and the number of years $n$ by the formula $\displaystyle \text{CAGR}=\left(\frac{V_n}{V_0}\right)^{\frac{1}{n}}-1$ Correct statements: (A) and (D) |
