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how to calculate arithmetic mean return. To calculate the geometric mean return we follow the steps outlined below. For example if there are a set of n numbers add the numbers together for example.
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Consider a mutual investment returns the following every year over six full years as shown below. The investment value after 5 years will be 13567 million as calculated below. The arithmetic average return will equal 64 ie.
11 -5 17 1 -9 21 4 -6 7 -1.
The arithmetic mean is simply the sum of the returns for each year divided by the number of years. To calculate the arithmetic average we take the simple average of the 5 yearly returns as follows. Then divide the sum by n. 1 R 1 1 R 2 1 R 3 1 R n 1 n 1 where.
