Table of Contents
What is Arithmetic Mean in Statistics?
The arithmetic mean (or simply the mean) of a set of numbers is the sum of the numbers divided by the number of numbers in the set.
Arithmetic Mean Formula in Statistics
In statistics, the arithmetic mean (or simply the mean) is the sum of a set of numbers divided by the number of numbers in the set. The arithmetic mean is often simply called the “average”. It is an important measure of central tendency.
The arithmetic mean is calculated by adding up all of the numbers in a set and dividing by the total number of numbers in the set. For example, if you have a set of five numbers, 2, 4, 6, 8, 10, the arithmetic mean is 6.
Example of Arithmetic Mean
The arithmetic mean of two numbers is their sum divided by 2.
For example, the arithmetic mean of 1 and 2 is 1.5.
How Does Arithmetic Mean Works In The Field of Finance?
In finance, arithmetic mean is the most commonly used type of average. It is calculated by adding up all of the numbers in a set and dividing by the number of items in the set. This type of average is used to measure the central tendency or typical value of a data set.
Limitations of Arithmetic Mean
The arithmetic mean is a versatile and commonly used statistic, but it has limitations. One limitation is that the arithmetic mean can be misleading if the data are not normally distributed. In addition, the arithmetic mean can be affected by outliers, or unusually high or low values in the data set.
Arithmetic Mean :
The arithmetic mean of two numbers is the sum of the numbers divided by two.
Key Takeaways
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