Arithmetic Mean Return refers to the average rate of return on an investment or portfolio over a specific period of time. It is calculated by summing up the individual returns for each period and dividing it by the total number of periods. This measure is commonly used to assess the overall performance of an investment or to compare the returns of different investments. The arithmetic mean return provides a simple and straightforward way to understand the average return earned over a given time frame. However, it does not take into account the impact of compounding or the volatility of returns, which may limit its usefulness in certain situations.
Arithmetic Mean Return is a statistical measure used to calculate the average return of an investment over a period of time. It is calculated by adding up the returns for each period and dividing by the number of periods. This measure is commonly used in finance and investment analysis to evaluate the performance of an investment portfolio. However, it should be noted that the arithmetic mean return may not accurately reflect the actual returns of an investment due to fluctuations and volatility in the market. Therefore, it is important to consider other measures such as standard deviation and risk-adjusted return when evaluating investment performance.
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This glossary post was last updated: 29th March 2024.
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