The definition, visualization and demonstration of a calculation of the Arithmetic return, or arithmetic mean return in Excel. Compare arithmetic to geometric. We discuss the three methods for calculating return over multiple time periods including the geometric return and log return, for investment and financial modeling of stocks and portfolios. We cover the =SUM function and =AVERAGE function for returns. To truly learn investment modeling knowing this calculation is vital.
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Topics covered in our investment glossary: Excel tutorial, Python examples, portfolio theory, portfolio return, portfolio risk, correlation, regression, linear algebra, alpha signal, risk models, performance attribution.
Glossary:
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