Geometric mean: Difference between revisions
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imported>Doug Williamson m (Spacing 27/8/13) |
imported>Doug Williamson (Updated entry. Source ACT Glossary of terms) |
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For example, the geometric mean return calculated from sample returns of 4%, 5% and 6% is given by: | For example, the geometric mean return calculated from sample returns of 4%, 5% and 6% is given by: | ||
(1.04 x 1.05 x 1.06)<sup>(1/3)</sup> -1 = 4.9968%. | (1.04 x 1.05 x 1.06)<sup>(1/3)</sup> -1 | ||
= 4.9968%. | |||
== See also == | == See also == | ||
* [[Arithmetic mean]] | * [[Arithmetic mean]] | ||
Revision as of 14:55, 22 November 2014
Geometric mean returns are calculated by taking account of compounding.
(Contrasted with the arithmetic mean, which ignores compounding).
For example, the geometric mean return calculated from sample returns of 4%, 5% and 6% is given by:
(1.04 x 1.05 x 1.06)(1/3) -1
= 4.9968%.
