The Arithmetic Return is the simplest way of calculating the rate of return on an investment. Geometric average return can be calculated using the following formula. This calculator calculates the arithmetic mean from a set of numerical values.
For example suppose an investment returns the following annually over a period of five full years.
R Return n Count of the numbers in the series beginaligned 1 textR_1 times 1 textR_2 times 1. Finally subtract 1. Click the Calculate button to calculate the Arithmetic Return. It overstates the true return and is only appropriate for shorter time periods.