The purpose of compound growth rate is to describe the expected value of transforming an investment return into a relatively stable investment return and measure your own investment return. For example, if your investment changes from 6,543.8+10,000 yuan to 6,543.8+0.5 million yuan in three years, then you can measure whether the annual return can reach your standard, so as to reflect on your past investment. The reason is the same.
On the other hand, it can well trace the growth of the company in the past. Judging from the development of a company or industry, it may just be in the growth period or explosive period, and it will change greatly in a few years. However, if measured by compound growth rate, it can better explain the growth potential and expectation of the company or industry because it is based on long-term accounting.
The concept of compound interest:
Calculating historical data is called "compound growth rate" and calculating future profits is called "compound interest". Compound interest, commonly known as rolling interest, belongs to a method of calculating interest. It mainly refers to converting the interest generated by our principal into the principal, and so on. We have been calculating the rolling interest period by period.
The essence of finance is value circulation. There are many kinds of financial products, including banks, securities, insurance, trusts and so on. Finance involves a wide range of academic fields, including accounting, finance, investment, banking, securities, insurance, trust and so on. Financial futures is a kind of futures trading.
Futures trading refers to the trading of standardized futures contracts in a centralized trading market by open bidding. Futures contract is the object or subject matter of futures trading, which is uniformly formulated by the futures exchange and stipulates a standardized contract to deliver a certain quantity and quality of goods at a specific time and place.