Loading the player...

What is a 'Mean'

A mean is the simple mathematical average of a set of two or more numbers. The mean for a given set of numbers can be computed in more than one way, including the arithmetic mean method, which uses the sum of the numbers in the series, and the geometric mean method. However, all of the primary methods for computing a simple average of a normal number series produce the same approximate result most of the time.


If stock XYZ closed at $50, $51 and $54 over the past three days, the arithmetic mean would be the sum of those numbers divided by three, which is $51.67.

In contrast, the geometric mean would be computed as third root of the numbers' product, or the third root of 137,700, which approximately equals $51.64. While the two numbers are not exactly equal, most people consider arithmetic and geometric means to be equivalent for everyday purposes.