Dictionary
/
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

Net Asset Value (NAV)

The value of a company's assets relative to the number of shares it has.
Read more

W-8BEN Form

Non-US individuals and businesses may have to file this form for the Internal Revenue Service (IRS), the US tax authority.
Read more

Holding Period Return

The amount of money generated by an asset during the time that it was held by an investor..
Read more

Internal Rate of Return (IRR)

A means of calculating the potential future return on an investment.
Read more

Dirty price

The total price payable on the purchase of a gilt. It’s calculated as the clean price plus accrued interest.
Read more

Balance sheet

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

Retail Prices Index (RPI)

An index published each month by the Office for National Statistics, which measures the level of retail prices in the UK. Cash flows on all index-linked gilts are linked to the RPI.
Read more

Volatility

A measure of how much the prices of an asset or index vary over time.
Read more

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.
Read more

You’re just minutes away from commission-free investing

open an isa
When you invest, your capital is at risk

Freetrade is your gateway to commission-free investing. Join over 1.6 million users using the Best online trading platform, as voted at the British Bank Awards for six years running.

Accounts
Customer Support
Resources
Company
Important information

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.

Follow us on