1Actual return is 1.9623% per annum, compounded annually, payable at maturity (equivalent to 6.00% total return)
2Actual return is 2.2935% per annum, compounded annually, payable at maturity (equivalent to 12.00% total return)
3Equivalent to the total return over the term of the investment (i.e. not an annualized rate)
4Actual return is 3.2291% per annum, compounded annually, payable at maturity (equivalent to 10.00% total return)
5Actual return is 3.7148% per annum, compounded annually, payable at maturity (equivalent to 20.00% total return)
6Actual return is 2.4410% per annum, compounded annually, payable at maturity (equivalent to 7.50% total return)
7Actual return is 2.2935% per annum, compounded annually, payable at maturity (equivalent to 12.00% total return)
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Now, let's delve into the concepts embedded in the provided set of investment information:
1. Actual Return
The actual return is a key metric in investment analysis, representing the actual gain or loss on an investment over a specific period. In the given context, it is expressed as a percentage per annum, compounded annually, and payable at maturity. The annual compounding indicates the frequency with which the investment's interest is calculated and added back to the principal.
2. Compound Annual Growth Rate (CAGR)
The compounded annual growth rate is a smoothed annual rate of return that provides a constant rate of return over a specified period, considering the effect of compounding. It is essential for comparing the returns on different investments over various time frames.
3. Total Return
Total return encompasses all aspects of an investment's performance, including both capital appreciation (or depreciation) and any income generated, such as dividends or interest. It is expressed as a percentage and is a comprehensive measure of an investment's profitability.
4. Annualized Rate of Return
The annualized rate of return is the geometric average rate of return per annum over a given period, accounting for the compounding effect. It's a useful metric for standardizing returns and making them comparable across different time frames.
5. Maturity
Maturity refers to the date on which an investment or financial instrument becomes due for payment. In the context of the provided information, the actual return is payable at maturity, indicating that the returns will be realized and distributed at the end of the investment period.
6. Equivalent Total Return
Equivalent total return is the total return over the term of the investment, expressed as a percentage. It differs from the annualized rate of return as it considers the entire investment period, providing a holistic view of performance.
7. Annual Compounding
Annual compounding is a method of calculating and applying interest on an investment once per year. It significantly influences the overall return, especially in long-term investments, as it determines how frequently the interest is added to the principal.
In conclusion, the provided information revolves around key concepts such as actual return, compound annual growth rate, total return, annualized rate of return, maturity, equivalent total return, and annual compounding. Understanding these concepts is crucial for making informed investment decisions and evaluating the overall performance of financial instruments.
