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geometric mean
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geometric mean

In mathematics, the nth root of the product of n positive numbers. The geometric mean m of two numbers p and q is such that m = √(p × q). For example, the geometric mean of 2 and 8 is √(2 × 8) = √16 = 4.


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MICRO-CAPS ARE DEFINED AS FUNDS WITH GEOMETRIC AVERAGE MARKET CAPS OF $350 MILLION OR LESS.
Advisers would be wise to add more questions to their due diligence checklist for Monte Carlo simulation software that includes: does the package contain normal or log-normal distributions; cross, serial and cross-serial correlation; standard deviations; and arithmetic or geometric average returns?
The geometric average over the 2-year period is zero; the arithmetic average of + 100 percent and -50 percent annual rates of return is +25 percent.
 
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