The Geometric Mean

The Geometric Mean

Abdulla Javeri

30 years: Financial markets trader

Abdulla outlines how to use and calculate the geometric average or geometric mean, also referred to as CAGR- the compounded average growth rate.

Abdulla outlines how to use and calculate the geometric average or geometric mean, also referred to as CAGR- the compounded average growth rate.

Join now to start learning today

Finance Unlocked is the video learning platform built for finance professionals.

This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

The Geometric Mean

4 mins 41 secs

Overview

The Geometric Mean is also known as the compounded annual growth rate. The example below shows how to use the geometric mean to calculate the return on a portfolio. It is important to understand that the geometric average should be used instead of the arithmetic mean in the context of a time-series calculation.

Key learning objectives:

  • Understand the geometric average

  • Analyse the situations in which the geometric average is more appropriate than the arithmetic average

Join now to watch

This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

Summary
logo-animationlogo-animationlogo-animation

Join now to watch

This content is also available as part of a premium, accredited video course. Sign up for a 14-day trial to watch for free.

Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

Related videos