/

Arithmetic Mean

Arithmetic Mean

The sum of a set of numbers added together and then divided by the total amount of numbers in that set.

‘Arithmetic mean’ is a fancy way of saying ‘mean’ or ‘average.’

To find the arithmetic mean, you add together a set of numbers and then divide your answer by the amount of numbers you had in that original set.

This may sound wordy - especially for math-o-phobes - but it’s really simple.

Take 1,2,3,4,5 as a set of numbers.

1+2+3+4+5 =15

In our original set, there were 5 numbers. So to get the average we just do….

15 ÷ 5 = 3

Simples.

More terms

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

Balance sheet

A summary of a company's finances, including its assets, liabilities and shareholder equity.

Bed & ISA

Understand what Bed and ISA is and how it works

Investment Return

The amount of money made or lost from an investment. Usually expressed as a percentage.

Collective investment scheme

Learn what's a collective investment scheme

Rate of Return

Profit on an investment, expressed as a percentage of the investment.

ESG investing

ESG is a hot topic right now for investors. Understand what ESG investing is all about and how you can use it to diversify your portfolio.

United States Dollar (USD)

The famous greenback our friends in the US use as currency.

You’re just minutes away from commission-free investing

When you invest, your capital is at risk

Freetrade does not provide investment advice and individual investors should make their own decisions or seek professional advice. The value of investments can go down as well as up and you may receive back less than your original investment. Freetrade is a trading name of Freetrade Limited, which is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales (no. 09797821).

© 2025 Freetrade, All rights reserved. The Apple logo is a trademark of Apple Inc. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.