What Is the Geometric Plan?
In statistics, the geometric mean is calculated by raising the product of a series of numbers to the inverse of the total length of the series. The geometric get over is most useful when numbers in the series are not independent of each other or if numbers tend to make large fluctuations.
Diligences of the geometric mean are most common in business and finance, where it is frequently used when dealing with parts to calculate growth rates and returns on a portfolio of securities. It is also used in certain financial and stock market signs, such as the Financial Times’ Value Line Geometric index.
Understanding the Geometric Mean
In Growth Rates
The geometric unkind is used in finance to calculate average growth rates and is referred to as the
Roots in Geometry
The geometric mean was first conceptualized by Greek philosopher Pythagoras of Samos and is closely associated with two other weighty means made famous by him: the arithmetic mean and the harmonic mean. In strictly geometric applications, the geometric mean may simply be used when positive numbers are involved.
The geometric mean is also used for sets of numbers, where the values that are multiplied together are exponential. Standards of this phenomena include the interest rates that may be attached to any financial investments, or the statistical rates if human denizens growth.