Measuring Returns in Financial Markets
Investment Returns Concepts, Calculations & Interpretation CAGR, XIRR, Average Returns, and Rolling Returns each reveal a different aspect of investment performance, and together they provide a far more complete picture than any single number could offer. PESAWALA helps demystify this complexity. Why Measuring Returns Look More Complex Than It Appears Every investor eventually asks a simple question: How well has my investment performed? The answer, however, is rarely as simple as quoting a single percentage. Different investments generate returns under different conditions. Some involve a one-time investment, while others receive regular contributions. Some perform consistently over time, while others alternate between periods of exceptional growth and disappointing decline. As a result, economists and financial analysts use several different measures to evaluate investment performance. Among the most important are Average Returns, Compound Annual Growth Rate (CAGR), Extended Inte...
