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how to calculate geometric mean rate of return. GAR sqrtn 1 r1 times 1 r2 times. N is the total number of sub-periods for which return is available.
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Where n is number of numbers and X1Xn are the numbers from the first to the n-th. Geometric Average Return Formula. Where r is the rate of return and n is the number of periods.
The final expression represents the geometric average of r 1 and r 2.
The geometric mean return calculates the average return for the investments which are compounded on the basis of its frequency depending on the time period and it is used to analyze the performance of investment as it indicates the return from an investment. Where R1 R2 and Rn are sub-period returns for period 1 2 and n respectively and. 1 R n 1n - 1. Geometricreturn sqrtn 1 r_1 times 1 r_2 times 1 r_3 times.
