24
Jan
Geometric Average Rate Of Return. The trick is to avoid problems posed by negative values. Return 101 1015 10075 1 328. Multiply all the returns in the sequence. Use of the Geometric Mean Return Formula.
Geometric Average Return is the average rate of return on an investment which is held for multiple periods such that any income is compounded. Mutual fund companies are required by law to report the compound average not the arithmetic average. For February is 15 and for March is 075 the Rate of Return for the period from January to March is. Return 101 1015 10075 1 328. Definition of Geometric Average Return Definition. Yet the average return is 25.
The result using the geometric average is a lot worse than the 12 arithmetic average we calculated earlier and unfortunately it is.
The average return should be 5 25 5. Return 101 1015 10075 1 328. The average return should be 5 25 5. The trick is to avoid problems posed by negative values. The only return that can do that is 0 so 0 is the geometric average return for Explosive. First add 1 to each return.