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For investment companies, the management fee and other expenses, including the expenses for
maintaining shareholder records, providing shareholders with financial statements, and providing custodial
and accounting services. For 12b-1 funds, selling and marketing costs are also included.
Annualized gain
If stock X appreciates 1.5% in one month, the annualized gain for that stock over a twelve month period is
12*1.5% = 18%. Compounded over the twelve month period, the gain is (1.015)^12 -1 = 19.6%.
Annualized holding period return
The annual rate of return that when compounded t times, generates the same t-period holding return as
actually occurred from period 1 to period t.
Annual percentage rate (APR)
The periodic rate times the number of periods in a year. For example, a 5% quarterly return has an A.P.R. of
20%.
Annual percentage yield (APY)
The effective, or true, annual rate of return. The A.P.Y. is the rate actually earned or paid in one year, taking
into account the affect of compounding. The A.P.Y. is calculated by taking one plus the periodic rate and
raising it to the number of periods in a year. For example, a 1% per month rate has an A.P.Y. of 12.68%
(1.01^12 -1).
Annual rate of return
There are many ways of calculating the annual rate of return. If the rate of return is calculated on a monthly
basis, we sometimes multiply this by 12 to express an annual rate of return. This is often called the annual
percentage rate (A.P.R.). The annual percentage yield annual percentage yield (A.P.Y.), described above, is
used to include the affect of compounding interest.
Annuity
A regular periodic payment made by an insurance company to a policyholder for a specified period of time.
Annuity due
An annuity with n payments, wherein the first payment is made at time t = 0 and the last payment is made at
time t = n - 1.
Annuity factor
Present value of $1 paid for each of t periods.
Annuity in arrears
An annuity with a first payment one full period hence, rather than immediately.
Anticipation
Arrangements whereby customers who pay before the final date may be entitled to deduct a normal rate of
interest.
Antidilutive effect
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