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Jan
What Is Geometric Average. The geometric mean often referred to as the geometric average is a so-called specialized average and is defined as the n-th root of the product of n numbers of the same sign. How to Calculate the Geometric Average. Geometric Average Return is the average rate of return on an investment which is held for multiple periods such that any income is compounded. An arithmetic average is simply the sum of all the terms numbers divided by the count of that sequence.
Geometric Average Return is the average rate of return on an investment which is held for multiple periods such that any income is compounded. In other words the geometric average return incorporate the compounding nature of an investment. How to Calculate the Geometric Average. Popularly called Geometric Mean Return it is primarily used for investments that are compounded. It is the n th root of the product of n numbers. This is how to figure geometric average with a finance calculator.
It is technically defined as.
An arithmetic average is simply the sum of all the terms numbers divided by the count of that sequence. It is the n th root of the product of n numbers. Geometric mean is a statisticalmathematical term that is applied in many other areas outside of health care. Geometric mean is the calculation of mean or average of series of values of product which takes into account the effect of compounding and it is used for determining the performance of investment whereas arithmetic mean is the calculation of mean by sum of total of values divided by number of values. Geometric mean is the average rate of return of a set of values calculated using the products of the terms. Definition of Geometric Average Return.