Arithmetic mean - Financial definition
Concise definition of the term arithmetic mean
The arithmetic mean of a set of numbers is the obtained by summing the values of all numbers and then dividing the result by the number of elements in the set.
Comprehensive definition of the term arithmetic mean
As an example, let's consider the following data series: {1, 2, 4, 5, 8}.
To calculate its arithmetic mean, we first have to sum up all the numbers in that data series: 1 + 2 + 4 + 5 + 8 = 20.
To finish, we divide the result of the calculation above by the number of elements in the data series, which is 5.
The arithmetic mean, written x̄, of the above data series is thus 20/5 = 4.