To calculate the mean enter the numerical values in the box above. 1 R 1 1 R 2 1 R 3 1 R n 1 n 1 where. To calculate the arithmetic average we take the simple average of the 5 yearly returns as follows.
First add 1 to each return.
The arithmetic mean is simply the sum of the returns for each year divided by the number of years. Calculate the sum of all the observations. One method is to calculate the arithmetic mean. Arithmetic Mean 3 3 4 9 6 18 7 12.