When data consist of percentages, ratios, compounded growth rates, or other rates of change, the geometric mean is a useful measure of central tendency. For n data values, the geometric mean, assuming all data values are positive, is as follows. To find the average growth factor over 5 years of an investment in a mutual fund with growth rates of 8.7% the first year, 11.5% the second year, 15.2% the third year, 3% the fourth year, and 7.1% the fifth year, take the geometric mean of 1.087, 1.115, 1.152, 1.03, and 1.071. Find the average growth factor of this investment. (Round your answer to four decimal places.) Geometric mean = V product of the n data values

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When data consist of percentages, ratios, compounded growth rates, or other rates of change, the geometric mean is a useful measure of central tendency. For n data values, the geometric mean, assuming all data values are positive, is as follows. To find the average growth factor over 5 years of an investment in a mutual fund with growth rates of 8.7% the first year, 11.5% the second year, 15.2% the third year, 3% the fourth year, and 7.1% the fifth year, take the geometric mean of 1.087, 1.115, 1.152, 1.03, and 1.071.

Find the average growth factor of this investment. (Round your answer to four decimal places.)

When data consist of percentages, ratios, compounded growth rates, or other rates of change, the geometric mean is a useful measure of central tendency. For n data values, the geometric mean,
assuming all data values are positive, is as follows. To find the average growth factor over 5 years of an investment in a mutual fund with growth rates of 8.7% the first year, 11.5% the second year,
15.2% the third year, 3% the fourth year, and 7.1% the fifth year, take the geometric mean of 1.087, 1.115, 1.152, 1.03, and 1.071. Find the average growth factor of this investment. (Round your
answer to four decimal places.)
Geometric mean = V product of the n data values
Transcribed Image Text:When data consist of percentages, ratios, compounded growth rates, or other rates of change, the geometric mean is a useful measure of central tendency. For n data values, the geometric mean, assuming all data values are positive, is as follows. To find the average growth factor over 5 years of an investment in a mutual fund with growth rates of 8.7% the first year, 11.5% the second year, 15.2% the third year, 3% the fourth year, and 7.1% the fifth year, take the geometric mean of 1.087, 1.115, 1.152, 1.03, and 1.071. Find the average growth factor of this investment. (Round your answer to four decimal places.) Geometric mean = V product of the n data values
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Step 1

Introduction:

The geometric mean is a mean or average that uses the product of its values, indicating the central tendency or the typical value of a set of numbers. For several purposes, the geometric mean is an important instrument for measuring portfolio results, but one of the most important is that it takes the effects of compounding into account.

Given information:

The given growth rates of 5 years are:

1st year=8.7%2nd year=11.5%3rd year=15.2%4th year=3%5th year=7.1%

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