###### CFA Level 1 Study Notes – Quanti ...

2023 Syllabus Study Session 1 R01 2023 – Time Value of Money -LOS... **Read More**

$$

\begin{array}{l|l}

\textbf { Type of Data } & \textbf { Mean to Use } \\

\hline \text { Single period data } & \text { Arithmetic mean } \\

\hline \text { More than one-period data } & \text { Geometric mean } \\

\hline \begin{array}{l}

\text { Data where each observation has different } \\

\text { weights }

\end{array} & \text { Weighted mean } \\

\hline \text { For ratios and rates } & \text { Harmonic mean } \\

\hline \text { For data having extreme outliers } & \text { Trimmed mean or Winsorized mean } \\

\end{array}

$$

QuestionWhich of the following means is the

mostsuitable for data with more than one period?

- Weighted mean.
- Arithmetic mean.
- Geometric mean.

SolutionThe correct answer is

C.The geometric mean is mostly used when calculating the mean of data with more than one period.

A is incorrect. The weighted mean is suitable for data where each observation has different weights.

B is incorrect. Arithmetic mean is suitable for single-period data.