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Annual Basis |
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Annual basis The technique in statistics of taking a figure covering a period of less than one year and extrapolating it to cover a full one year period. The process is known as annualizing. Annual Basis The expression of a variable in yearly terms even though the variable does not directly apply to a year. That is, a variable expressed on an annual basis has been mathematically converted to yearly terms. For example, if the return rate on an investment is 2% after one month, one computes the return on an annual basis by multiplying by twelve, resulting in a 24% return rate. A variable on an annual basis is often theoretical; there is often no guarantee that the return rate in the example above will be 24% if it is calculated after a month or two. An annual basis usually does not take into account the effects of compounding. It is also called annualization. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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