DEFINITION of 'Exponential Growth'
A pattern of increasing prices that resembles the curve of an exponential function. In finance, exponential growth is caused by compounding returns. Given enough time, compound interest can theoretically turn even a relatively small amount of principal into a very large sum.
BREAKING DOWN 'Exponential Growth'
While exponential growth is often used in financial modeling, reality is often much more complicated. For instance, stock market returns clearly do not smoothly follow long term averages each year as predicted in simple financial calculations. Thus, other methods of analyzing long term portfolio values and expectations, such as Monte Carlo simulation, have seen increasing popularity.

Compound Annual Growth Rate  CAGR
The Compound Annual Growth Rate (CAGR) is the mean annual growth ... 
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TimeWeighted Rate of Return
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The ability of an asset to generate earnings, which are then ... 
Compound
The ability of an asset to generate earnings, which are then ... 
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A principle that defines the relationship between the price of ...

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What can I use the Rule of 70 for?
The rule of 70 is used to see how long it takes for an exponentially growing value to double. It is most commonly seen in ... Read Full Answer >> 
Can mutual funds invest in hedge funds?
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When are mutual funds considered a bad investment?
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What fees do financial advisors charge?
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What does a high turnover ratio signify for an investment fund?
If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a oneyear period. ... Read Full Answer >> 
What is the utility function and how is it calculated?
In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>