Annualization and the 4% cap

A rate is 0.01% per 8 hours. You multiply it by 8,760 and get 87.6%. What went wrong?

• Nothing, 8,760 is the number of hours in a year
• An 8-hour rate must be multiplied by the number of 8-hour periods, 1,095, giving 10.95%
• It should be multiplied by 365, giving 3.65%

What does the compounded yearly figure assume that the simple one doesn't?

• That the funding rate rises during the year
• That each payment is reinvested so later payments are on a bigger position
• That trading fees are included