Metrics & Calculations
4 terms
Important financial metrics and formulas for informed decisions.
Annualized Rate of Return
The average annual growth rate of an investment, calculated using initial and final values over the holding period.
Compound Interest
Interest calculated on the initial principal and accumulated interest of previous periods, resulting in exponential growth over time.
Return on Investment (ROI)
The profitability of an investment relative to its cost, calculated as the gain divided by the investment cost, expressed as a percentage.
Savings Rate
The percentage of income saved rather than spent, calculated as savings divided by gross or net income.