The geometric mean is the average rate of return of a set of values, calculated using products of terms.
The geometric mean is most suitable for series showing sequential correlation, especially for investment portfolios.
Most returns in finance are correlated, including bond returns, stock returns, and market risk premiums.
For volatile numbers, the geometric mean provides a much more accurate measure of true returns, taking into account the accrual of interest over the years, which smooths out the average.
Performance Based Management (ABM) is a means of analyzing a company’s profitability by looking at every aspect of its business to determine its strengths and weaknesses.
A ballpark figure is a rough estimate of what something might mean in numerical terms when a more precise number is estimated, such as the cost of a product.
The binomial distribution is a probability distribution that generalizes the probability that a value will take on one of two independent values given a set of parameters or assumptions.
Share capital is the number of ordinary and preferred shares that the company has the right to issue and which are accounted for on the balance sheet as part of share capital.
The Central Limit Theorem (CLT) states that the distribution of sample means approaches a normal distribution as the sample size increases, regardless of the distribution of the population.