What it is:
How it works/Example:
Let's assume Company XYZrises by 2% in one week. The 2% is an unannualized return -- it's just for the period in question and does not reflect what a person would earn if this performance continued for a full .
Why it matters:
Unannualized returns reflect the returns only for a certain period of time, which makes them hard to compare to returns for other securities.
Annualized returns, on the other hand, give investors a way to compare returns. The measure tells investors what the would in a if it continued on its current path. Without this and other standardized, required disclosures, such as mutual or funds could manipulate their yield calculations. It is important to , however, that performance over a specific unannualized period rarely continues for a full year, which makes annualized returns more like estimates and unannualized returns more like the real thing