harmonic mean

CFA Level I
#1

formula == 12 seconds bonus question: what is the MAD (deviation-related) formula – 10 seconds

#2

it is N / E(1/Xi) for i = 1 to N… THe better question is when do you use harmonic mean. That I do not know, maybe you can help with that?

#3

Harmonic mean is used when u wanna determine average price of shares purchased (I think?) MAD = E |xi-xbar|/n

#4

topher Wrote: ------------------------------------------------------- > Harmonic mean is used when u wanna determine > average price of shares purchased (I think?) > > MAD = E |xi-xbar|/n That is correct. or if you wanna find out average time it’ll take for two bees working together at a difference pace to finish a job.

#5

Harmonic mean is not contained in Schweser Secret Sauce, which leads me to believe that arithmetic mean and geometric mean are much more likely to be tested.

#6

It is part of the quick sheet though. If it is not in SS, it still is fair game.

#7
  1. Gotta be careful with this E thing. MAD = E |xi-xbar|/n is not right. It’s either MAD = E |xi-xbar| or MAD = Sum |xi-xbar|/n 2) The only thing I can think of for the harmonic mean in finance is te dollar-cost averaging average share price. If you buy $1000 worth of stock every month at 3, 4, 5, 6 then your average price per share is the harmonic mean of 3,…,6