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Published in:
2011 | OriginalPaper | Chapter
Mean Returns
Author : Javier Estrada
Published in: The Essential Financial Toolkit
Publisher: Palgrave Macmillan UK
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This chapter discusses three definitions of mean returns and highlights their different interpretations and uses. In many cases, particularly when evaluating risky assets, the concept of “mean return” is meaningless, and stating the type of mean return discussed, arithmetic or geometric, is essential. Also, when investors trade actively, their mean return and that of the asset in which they invest may differ substantially, which requires yet another concept, the dollar-weighted mean return.