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Why is Geometric Mean Better than Arithmetic?
Why is Geometric Mean Better than Arithmetic?
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Solution
The Geometric Mean Better than Arithmetic:
- Geometric mean is better than arithmetic mean, because the geometric mean is more accurate and effective, when there is a volatility in the data set.
- This is the reason, geometric mean is mostly used in the finance to calculate the portfolio returns.
- Also, geometric mean is used in the scenario, when the variables are dependent on each other.
The Geometric Mean Better than Arithmetic:
- Geometric mean is better than arithmetic mean, because the geometric mean is more accurate and effective, when there is a volatility in the data set.
- This is the reason, geometric mean is mostly used in the finance to calculate the portfolio returns.
- Also, geometric mean is used in the scenario, when the variables are dependent on each other.
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