标题: Difference between Geometric Mean and CAGR? [打印本页] 作者: w1977 时间: 2011-7-13 15:09 标题: Difference between Geometric Mean and CAGR?
When given asset value, we are able to use either but when given the return rates, we can only use Geometric Mean?
Thanks.作者: Bluetick1010 时间: 2011-7-13 15:10
I'm not sure if I understand your question completely. CAGR and Geometric Mean are the same thing.作者: lc26mizzou 时间: 2011-7-13 15:10
revenant Wrote:
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>
> When computing the growth rate given the returns
> over the few years, I suppose we use Geometric
> Mean to calculate?
>
> When computing the growth rate given the beginning
> and ending value, we use CAGR to calculate?
>
> If not, how do you calculate returns using CAGR
> since its formula is "(Ending / Beginning) ^
> (1/years) -1" ?
>
> Thanks.
Anyone?作者: disiz64 时间: 2011-7-13 15:10
tsx11 Wrote:
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> these methods should result in the same figure, so
> i'd say that depending upon the input provided,
> make the choice from that.
I can't see that happening actually.
What if a stock's value for the last 3 years are $10, $20, then $15? We don't just use (15-10)^1/3 -1 do we?
Just trying to make things clearer.
Thanks.作者: nitoha 时间: 2011-7-13 15:10
YR1-2
growth rate: (20-10)/10 = 100%
Yr 2-3
growth rate: (15-20)/20 = -25%
CAGR: (2*.75) ^ 1/2 = 1.2247 ==> 22.47%
which is the same as (15-10)/10 ^ 1/2
remember that you have to look at the intervenining number of periods -- which is 2 and not 3 as you have used above.
