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ARITHMETIC DAN GEOMETIC MEAN Pertemuan 3 Matakuliah: F0892 - Analisis Kuantitatif Tahun: 2009

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Bina Nusantara University 3 ARITHMETIC MEAN What Does Arithmetic Mean Mean? A mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series. Arithmetic mean is commonly referred to as "average" or simply as "mean".

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Suppose you wanted to know what the arithmetic mean of a stock's closing price was over the past week. If during the five- day week the stock closed at $14.50, $14.80, $15.20, $15.50, and then $14.00, its arithmetic mean closing price would be equal to the sum of the five numbers ($74.00) divided by five, or $14.80. Bina Nusantara University 4 ARITHMETIC MEAN

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Bina Nusantara University 5 ARITHMETIC MEAN n t=1 n Ã = ∑ HPY

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Bina Nusantara University 6 Ĝ = [(1+HPY₁) x (1+HPY₂) x … x(1+HPY n )] ½ - 1 Geometric Mean What Does Geometric Mean Mean? The average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio. Technically defined as "the 'n'th root product of 'n' numbers", the formula for calculating geometric mean is most easily written as: GEOMETRIC MEAN

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Bina Nusantara University 7 HPY ₁ = 12% HPY ₂ =24% Ã = 12 + 24 = 18% 2 Ĝ = [(1,12) x (1,24)] ½ - Grand Pa

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12.4 – Find Sums of Infinite Geometric Series. Think about this… What will happen when n becomes really big? It will get closer and closer to zero.

12.4 – Find Sums of Infinite Geometric Series. Think about this… What will happen when n becomes really big? It will get closer and closer to zero.

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