The formula used to calculate the arithmetic average is as follows:
The arithmetic average is the sum of all of the values in a data set divided by the total number of observations.
Assume that you are presented with the following mutual fund expense ratios:
- Fund One – 0.75%
- Fund Two – 0.08%
- Fund Three – 1.15%
- Fund Four – 0.90%
- Fund Five – 0.14%
Using these values, we can calculate the arithmetic average as follows:
Using an HP12C calculator, we can calculate the arithmetic average using the following keystrokes:
[.75][Σ+]
[.08][Σ+]
[.015][Σ+]
[.009][Σ+]
[.0014][Σ+]
[g][x-bar]