Find the Linear Approximation at X = 0 to Show

question 91

Essay

Find the linear approximation at x = 0 to show that the following commonly used approximation is valid for "small" x.

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Definitions:

Compound Annual

The rate of return that would be required for an investment to grow from its beginning balance to its ending one, assuming the profits were reinvested at the end of each period of the investment's lifespan.

Rate of Return

The profit or deficit experienced on an investment during a particular timeframe, represented as a proportion of the investment's initial expense.

Templeton Growth Fund

A mutual fund that aims for long-term capital growth by investing primarily in the equity of companies around the world.

Invested

Money that is allocated for a particular purpose, such as buying stocks or bonds, in the hope of generating a financial return.