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how do you calculate geometric return. The geometric mean is the average growth of an investment computed by multiplying n variables and then taking the nth root. This is equivalent to raising 19500 to the 15-th power.
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Calculate the rate of return for each sub-period by subtracting the beginning balance of the period from the ending balance of the period and divide the result by the beginning balance of the. The general formula for the geometric mean of n numbers is the nth root of their product. 10310510899110 15 or 2-1 493.
The formula for the geometric mean return is used specifically for investments that are compounded.
Geometric average return can be calculated using the following formula. In our example the geometric returns can be calculated as follows. The geometric mean return formula can also be used to break down the effective rate per period of the holding period return. Katex is not defined Where r is the rate of return and n is the number of periods.
