In investment parlance, "annualised" refers to the conversion of shorter-term rates of return into an annual rate. It is a tool to gauge an investment's performance over a year, irrespective of the actual period. The advantage of annualising returns lies in its ability to provide a common ground to compare different investments. For instance, it allows a direct comparison between a three-month investment returning 4% and a one-year investment returning 12%—both yield the same annualised return. Therefore, annualised returns serve as a valuable yardstick to evaluate the relative merits of various investment opportunities, enabling investors to identify those most likely to offer the highest return over a year.
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