Geometric mean

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Revision as of 11:44, 27 August 2013 by imported>Doug Williamson (Spacing 27/8/13)
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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%.


See also