Reading 2.2 said Geometric mean is used to calculate the investment return over multiple periods , while reading 34 (Equity) also talks about compounding returns over the whole periods. But there is a different with the formulas of which the geometric mean has the n root. I am confused. Can anyone help? Thank you.
Taking the nth root gives you the return per period; without taking the nth root you get the total return for all periods together.
Ten percent per year vs. 94.87% for seven years.
1 Like
I got it. Thank you so much.