When interest is compounded, it means that interest is accrued on the interest earned as well as the principle. Interest may be compounded yearly, semiannually, quarterly, or even
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I think there is confusion between the terms "compounding variable" and "confounding variable". My way of looking at it is that compounding variables describe
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1. Know how the Mean (or average) of n annual returns is calculated. : Mean = (R. 1. R. 2. . + R. n. / n. 2. Know how the CAGR (or Annualized Return) is calculated (quite differently
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