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Annualized return for HF - EoC Q11B book 5

when calculating the annualized return for the Sortino ratio, why do we first calculate the geometric annual return, then take the 12th root and multiply it by 12.

I would have only calculated the geometric annual return but not done step 2 and 3.


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I also would like to know.

I think the difference is if somebody can explain the difference between compounded annual return and annualized return.

Step 1 is getting the compounded annual return. Step 2 and 3 is turning it into annualized return.