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how to calculate geometric mean finance. Another way to calculate the geometric mean is with logarithms as it is also the average of logarithmic values converted back to base 10. Put simply the geometric average return takes into account the compound interest over the number of periods.
How to Calculate the Geometric Average The geometric mean for a series of numbers is calculated by taking the product of these numbers and raising it to the inverse of the length of the series. Geometric Mean Return Formula r rate of return n number of periods. 5th Square Root of 1 0051 011 021 051 02 1 -003621.
How to Calculate the Geometric Mean In order to calculate Geometric Mean we multiply the given numbers altogether and then take a square root given that there are two numbers or cube root for three numbers 5th root for five numbers etc.
5th Square Root of 1 0051 011 021 051 02 1 -003621. Rn growth rate for year N. Geometric mean is an nth root of the product of all numbers in a collection. This is equivalent to raising 19500 to the 15-th power.