Geometric Mean Formula:
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The geometric mean is a type of average that indicates the central tendency of a set of numbers by using the product of their values (as opposed to the arithmetic mean which uses their sum). It's particularly useful when comparing different items with different ranges.
The calculator uses the geometric mean formula:
Where:
Explanation: The geometric mean is calculated by multiplying all numbers together, then taking the nth root of the product (where n is the count of numbers).
Details: The geometric mean is commonly used in:
Tips: Enter numbers separated by commas. All values must be positive numbers. The calculator will ignore any non-numeric values.
Q1: When should I use geometric mean instead of arithmetic mean?
A: Use geometric mean when dealing with proportional growth, multiplicative processes, or data that are exponential in nature.
Q2: Can geometric mean handle negative numbers?
A: No, geometric mean is only defined for sets of positive real numbers since you can't take roots of negative numbers in real number system.
Q3: How does geometric mean compare to arithmetic mean?
A: Geometric mean is always less than or equal to the arithmetic mean (unless all numbers are equal, in which case they're the same).
Q4: What's the geometric mean of 4 and 9?
A: √(4×9) = √36 = 6. Notice this is different from the arithmetic mean (6.5).
Q5: Why use geometric mean for financial returns?
A: Because investment returns compound over time, and geometric mean accounts for this compounding effect.