How do I convert daily interest to annual interest?
I've calculated the daily return on a stock for a period of 5 years, and took the average of that return. And now I want to convert that average daily return to its equivalent annual return.
Public Comments
- D=daily rate in decimal form, i.e. 5% would be 0.05 A=annual rate in decimal form A=(1+D)^365-1 That would be for interest calculated daily, but you are talking about a stock so replace 365 with the number of trading days in that year, usually around 250. But average returns are meaningless. If a stock starts at 100 and goes up 50% to 150 one day and then drops 50% to 75 the next day, the average daily return is 0% but you lost 25% of your money.
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