Log Returns

[@TheRasmi15]

This is the greatest video on the entire internet

[@nickbendeck9599]

Ronald. It is not a problem or surprising to see a 15% decrease bring down the value of the investment to a value below the original starting point. The reason why this happens is because this 15% decrease is based on a higher number (115)

[@Tyokok]

Thanks for great video, Ronald! One question here: so at 8:44, which return is more accurate or proper to use? or this is more like case by case solution? Thank you!

[@Kig_Ama]

3:03 Why should it be zero, it should be as calculated -2.25%. I don't get the point. If the price goes up 15% the value is not 100% anymore but 115%. So why everyone tries so hard to c a result of zero if it then goes down 15%?

[@Ghaith7702]

what people are really confused about is why it not 100% (or 0% return or the investment),it goes up by 15% then down 15% that is because it on 2 periods so the -2.25% is actual the total return on the investment which equals = ((inv*(1+15%)*(1-15%))-inv/inv)*100

[@nikitasergeev4414]

Thank you for the explanation, very very helpful! I have got one question, shouldn't the axes in the graph be labeled reversely? Meaning x axis is arithmetic return and y axis is the logarithmic returns? Because running a calculation of assigning a 40% arithmetic return to a 33.647% logarithmic return would suggest so.. (just so I understand properly)

[@RonaldMoy]

That might be a better way to draw the graph. I believe I found this example somewhere and just decided to go with what they prsented.

[@STONE9523]

Thanks for the video. There is a question. So continuous compounding return is just the log return? cuz they are in exactly the same format. Thanks.

[@akumar234]

I have seen people using Natural Log "log (p2/p1)", while calculating daily returns of stock/Index for long period data (15-20 years), instead of using '(p2 - p1)/p1'. Could not know very good reason. Is it more accurate to use Natural Log ? Can you make a Video on this in detail for benefit of all of us. Rgds.