cRYPTO Glossary

The Average Annual Growth Rate (AAGR) represents the mean annualized return of an investment, portfolio, asset, or cash flow over a specific period of time.

Explanation of Specific Terms:

• Mean return: AAGR calculates the average rate of growth or return per year, smoothing out fluctuations over the entire period.
• Individual investment, portfolio, asset, or cash flow: AAGR can be applied to measure the performance of a single investment, a collection of investments (portfolio), a specific asset, or the cash flow generated from an investment or business activity.
• Annual basis: AAGR is expressed as a percentage per year, providing a standardized measure to evaluate investment performance over time.

Key Points for Beginners:

• Calculation: AAGR is calculated using the formula: AAGR = ((Ending Value / Beginning Value)^(1 / Number of Years)) - 1
• This formula computes the average growth rate annually based on the starting and ending values of the investment or asset.
• Utility: AAGR helps investors assess the historical performance and potential future growth prospects of investments or assets.
• Considerations: AAGR is a useful metric for comparing the growth rates of different investments or assets over the same period, providing insights into long-term performance.