Groundlearn / Glossary / Arithmetic mean
Arithmetic mean
Also called average. A CFA and FRM term, defined in plain English with the distinction examiners test.
What it means
The sum of the observations divided by their number.
The exam angle
The right estimate of a single future period’s return. For growth already achieved over several periods, the geometric mean is the honest number.
Where it appears in the syllabus
- Quantitative MethodsCFA Level I · exam weight 11–14% · Returns and benchmarks, time value, distributions, portfolio maths, regression.
- Quantitative AnalysisFRM Part I · exam weight 20% · Probability, hypothesis testing, regression, time series, volatility, simulation.
Related terms
- BootstrapResampling the observed data with replacement to estimate the sampling distribution of a statistic, without assuming a…
- Central limit theoremFor a large enough sample, the distribution of the sample mean approaches normal regardless of the shape of the…
- Coefficient of determinationThe fraction of the dependent variable’s variation explained by the regression.
- Confidence intervalA range that will contain the true parameter in a stated proportion of repeated samples.
- Continuous compoundingCompounding over infinitely small intervals.
- CorrelationCovariance divided by the product of the two standard deviations, giving a unit-free number between −1 and +1.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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