Compounding quiz

Discussion in 'Strategy Building' started by botpro, Feb 9, 2016.

300% profit in 6 months makes compounded how much % profit in a year?

  1. 600%

  2. 750%

  3. 1000%

  4. 1500%

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  1. botpro

    botpro

    For calculating the percent for a period (ie. month) one can use the following formulae (here as C++ functions):
    Code:
          double PeriodPct(const double AdblStartCap, const double AdblEndCap, const double AdblPeriods)
            { // = (nthRoot(Kn/K0) - 1) * 100
              return (pow(AdblEndCap / AdblStartCap, 1.0 / AdblPeriods) - 1.0) * 100.0;
            }
    
          double PeriodPct(double AdbPLpct, const double AdbPeriods)
            {
              const bool fNeg = AdbPLpct < 0.0;
              if (fNeg) AdbPLpct *= -1.0;
              double db = PeriodPct(100.0, 100.0 + AdbPLpct, AdbPeriods);
              if (fNeg) db *= -1.0;
              return db;
            }
    
    If one knows only the percent of x periods and x, then one can use the second function.

    Like K-Pia wrote, one can also first calculate the monthly pct, and then extrapolate to 12 months.
     
    Last edited: Feb 9, 2016
    #11     Feb 9, 2016
    K-Pia likes this.
  2. Amalgam

    Amalgam

    4*4=16
    16-1=15
    1500%
     
    #12     Feb 9, 2016
    K-Pia and gkishot like this.
  3. (Additional quiz)

    Someone started investing at 30 and now 80, with 5000 times now of the initial seed.

    (For example he made 5000*10K at 80, with seed of saved 10K at 30)

    What is the annual compounded rate?
     
    #13     Feb 10, 2016
  4. That sentence made me think of a thermonuclear weapon.
    [​IMG]
     
    #14     Feb 10, 2016
    K-Pia likes this.
  5. K-Pia

    K-Pia

    Since he / she turned eighty,
    It has compounded for 49 years.
    0.145% Monthly ... 18.9% Yealry ...
     
    Last edited: Feb 10, 2016
    #15     Feb 10, 2016
  6. K-Pia

    K-Pia

    Great intuition, Massive !
     
    #16     Feb 10, 2016
  7. botpro

    botpro

    499900% in 50 years...:
    when using periodic compounding: 18.571250487% p.a.
    when using continuous compounding: 17.034386383% p.a.

    Is that maybe good ole Warren Buffett? ;-)
    No, no Warren Buffet started investing as a kid...
     
    Last edited: Feb 10, 2016
    #17     Feb 10, 2016
    K-Pia likes this.
  8. 300% in 6 months means you quadrupled your money.
    Quadruple it again, in the next 6 months, means you have x16, which is 1500%.
     
    #18     Feb 10, 2016
    K-Pia and botpro like this.

  9. Pretty close. But watch 50 Y from 30 to 80

    See
    1.2^50 =9100.438 =9000

    And
    1.18^50 = 3927.357 = 4000
     
    #19     Feb 10, 2016
    K-Pia likes this.
  10. danoXP

    danoXP

    Continuous compounding is applicable
    ----
    P at Tzero
    300% at Tone = 4P
    Ttwo = exp ( 2 * ln(4) ) = 16P
    16P is 1500% return
     
    #20     Feb 13, 2016