Arithmetic mean
The arithmetic mean is the sum of observed values divided by the number of observations. It uses every value and can be affected strongly by extremes. For a frequency distribution, multiply each value by its frequency, add the products and divide by total frequency. With grouped intervals, midpoint calculations estimate rather than exactly recover the original mean. State whether data are equally weighted or require a different weighting basis.
Worked example
Five transaction values are $4, $6, $6, $9 and $15. Their mean is ($4 + $6 + $6 + $9 + $15) / 5 = $8. The mean need not itself be an observed value.
Common mistake
Averaging subgroup means without allowing for different subgroup sizes.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
