All videos · NISM Series V-A · Chapter 10
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CAGR explained, with the formula
₹1,00,000 grows to ₹1,61,051 in 5 years. The simple return is 61.05%, but the CAGR is 10% a year. Here is the formula and how to use it.
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The full concept: Measuring returns
Worked example: ₹1,00,000 grows to ₹1,61,051 in 5 years. CAGR = (1.61051)^(1/5) − 1 = 10% a year. The simple return is 61.05%.
Exam trap: For an IDCW-paying scheme, a return calculated only from NAV change understates the true return.
