The correct answer is option 'C' - Compound annual growth rate.

Explanation:

- Compound Annual Growth Rate (CAGR) is the rate at which an investment grows over a specific period of time, assuming that the profits are reinvested.
- CAGR is a financial metric that can be used to calculate the average annual growth rate of an investment over a specific period of time.
- CAGR is often used to compare the performance of different investments, especially those that have different starting and ending values.
- It is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.
- The formula for CAGR is: [(Ending Value / Beginning Value)^(1/n)] - 1, where n is the number of years.
- CAGR is expressed as a percentage and is a useful tool for measuring the performance of investments over time.

Example:

Suppose you invested $10,000 in a stock that had a value of $12,000 after one year, $15,000 after two years, and $18,000 after three years. To calculate the CAGR of this investment over the three-year period, the formula would be:

CAGR = [(18,000 / 10,000)^(1/3)] - 1 = 16.07%

This means that the investment had an average annual growth rate of 16.07% over the three-year period.

Conclusion:

CAGR is an important financial metric that can be used to measure the performance of investments over a specific period of time. It is commonly used by investors, analysts, and financial institutions to compare the performance of different investments and to evaluate their potential returns.

Option C is correct - Compound Annual Growth Rate.
The CAGR is a mathematical formula that provides a "smoothed" rate of return. It is really a pro forma number that tells you what an investment yields on an annually compounded basis — indicating to investors what they really have at the end of the investment period. ... Using average annual return does not work.