Observe and analyze the picture of profitability over the past 6 months.It is clear that stocks, commodities and other financial instruments can not ensure a constant capital growth.It can vary and be, for example, as follows: 17%, 5%, 3%, 37%, 51% and 7%.An exception is bonds, deposits and instruments with a fixed rate of return.
To describe profitability used indicator of the average income, which is calculated by several methods, at times, not always accurate.Simple or standard method for determining the average rate of profit involves the use of the arithmetic mean value.For rates of return above example shows that the arithmetic mean will be: (17 ± 5 - 3 + 37 + 51 + 7) / 6 = 19. That is, the average monthly yield is 19%.Make sur
e it is in reality.Imagine that you have invested 100 p.Then, in accordance with the above monthly yield you will receive an amount equal to about 284 p.In other words, at an average yield of 19% within 6 months you get to the end of the 284 sub-district at 100 p.
compare the results of your calculations with real monthly income.After simple calculations, you find that the real capital at the end of the period amounted to 263.77 p, whereas, according to the method of determining the arithmetic average return, it is equal to 284 p, ie,approximately 7.1%.So easy to see that the standard method does not reflect the reality and give exaggerated figures from your investment.
to really estimate the average income for a specific period, use the formula of the geometric mean, or the proportional values rather than the arithmetic mean.For this example, the average monthly income in the calculation of the percentage in the correct will be: (1.17 * 1.05 * 0.97 * 1.37 * 1.51 * 1.07) ^ (1/6) = 15.8263%rather than 19%, which is lower than with a standard counting.After checking the accuracy of the arithmetic of this method, you are sure to get the real value of 263.77 p.
used in practice lessons learned.Ask about the method of calculating the average profitability , for example, own assets.Keep in mind that the organizations concerned (by the PIF to personal brokers) can take advantage of the situation and give you false information, which is especially important when dealing with impressive amounts of money.
properly assess your average earnings over a certain period and be sure to specify a method for determining this index, not allowing yourself to cheat.
Tip 2: How to determine the arithmetic mean
To determine the mean values such as, for example, attendance is calculated by the arithmetic mean.More in mathematics it is called "simple average number".It is most often used to summarize the statistical information when there are multiple values for one indicator.
Determine the arithmetic mean of the amounts which ones you need to find.Be sure to check whether all the numerical values you have, because if you do not take into account at least one number, the result will be incorrect.Determine the number of terms of values.You should carefully consider how many numbers have been made to the calculation.
Fold all the numerical values.Spend a control check of the amount received as the correctness of its calculation depends on the final result of all the actions.For the accuracy of the calculations is better to use a calculator.
early Divide the sum of the numbers on their number.For the accuracy of the computation is better to use a calculator.The result of division is the average value of the number of terms.
Heed all stages of calculation, since the error in at least one of the calculations will result in incorrect totals.Check calculations obtained at each stage.The arithmetic mean of the number has the same meter as the number of terms, that is, if you define an average attendance of students, all the figures you will be "man."
This method of calculation only applies mathematical and statistical calculations.For example, determining the arithmetic mean value computer has a different algorithm calculation.The arithmetic mean value is a measure of the conditional.It shows the probability of a particular event, provided that it has only one factor or measure.For more in-depth analysis must take into account many factors.This applies to the more general calculation values.