How to Calculate the Arithmetic Average

The formula used to calculate the arithmetic average is as follows:

The arithmetic average is the sum of all of the values in a data set divided by the total number of observations.

Assume that you are presented with the following mutual fund expense ratios:

• Fund One – 0.75%
• Fund Two – 0.08%
• Fund Three – 1.15%
• Fund Four – 0.90%
• Fund Five – 0.14%

Using these values, we can calculate the arithmetic average as follows:

Using an HP12C calculator, we can calculate the arithmetic average using the following keystrokes:

[.75][Σ+]
[.08][Σ+]
[.015][Σ+]
[.009][Σ+]
[.0014][Σ+]
[g][x-bar]