Annualization Charts

Annualization Charts Asset That Loses $1 Per Day for 100 Days ' 'Asset Price Daily % Return (Right Axis) 120 100 80 60 40 20 % <11 N% et-% et?' # 9ry # ap t).? # # <o% eb p, 6011% 1rO Oplbt't00 9Z,# Asset That Loses -1.38% Per Day for 100 Days Asset Price Daily % Return (Right Axis) 120.0 100.0 80.0 60.0 40.0 20.0 t 03% b° ti` t2) 4.4, yr° 6O cot' 6O'19'16 43% # # # 0 a <7.• (1,9 1 -40% -60% -80% 100% 2 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% -1.00% -1.50% 2.00% Narrative Chart 1 displays an asset with a constant dollar loss. On day 1, the percent return (red line) is -1%. By day 90, the daily percent return is -8%. At day 100 it is -100%. Chart 2 displays an asset with a constant percentage daily loss. This is the logic of annualizing returns, which is employed by the charts program. At a constant rate of loss (represented by the red line), the asset does not decline linearly. At day 50, the price of both assets is 50. Annualizing* the 50 days of performance will yield different results, depending on whether you are projecting dollar losses or % losses. Chart 2 is the method in general usage. l am assuming that years contain 100 days for the sake of simplicity. EFTA00724883