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Finance Dictionary and Glossary of Investment Terms
1. Converting the rate of return from a period of less than one year to an annual (yearly) basis. 2. Converting the taxation period from less than one year to an annual (yearly) basis.
To extrapolate a value so that it reflects an expected or approximate total for a full year. This rate usually does not reflect the effects of compounding.
Convert to a yearly basis. If inflation was 1% in a given month, it is considered to be running at 12% on an annualized basis. Note that annualized figures typically ignore compounding.