Chapter 3.1, Problem 30P

Expand Your Knowledge: Geometric Mean 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,

$\text{Geometric mean }=\sqrt[n]{\text{Product of the }n}\text{ data values,}$ assuming all data values are positive

To find the average growth factor over 5 years of an investment in a mutual fund with growth rates of 10% the first year, 12% the second year, 14.8% the third year, 3.8% the fourth year, and 6% the fifth year, take the geometric mean of 1.10, 1.12, 1.48, 1.038, and 1.06. Find the average growth factor of this investment.