Definition of Arithmetic Mean
Arithmetic means is the sum of all numbers divided by the total number count to find a center number or average. This is easy to calculate with simple finance and math skills.
Example of Arithmetic Mean:
Let’s take 50,55,60,65 and 70. Their sum is 300. To find the average or central tendency, divide 300 by 5. The Arithmetic mean is 60.
In finance, the arithmetic mean is widely used. You are interested to calculate the average closing price of a particular stock in a month. You will take the daily closing price of the stock and divide it by the total no of active trading.