Finance Definition
Harmonic Mean
📈 Investing
intermediate

Quick Definition

The harmonic mean is a type of average, calculated by dividing the number of observations by the sum of the reciprocals of the observations.

Formula

n / (1/x1 + 1/x2 + ... + 1/xn)

Examples

  • 1Calculating the average rate of return on investments when each investment has different capital amounts.
  • 2Determining the average cost of shares purchased at different prices.
  • 3Using in portfolio analysis to find the average yield of various bonds.

Tags

statisticsaveragesinvestinganalysisportfolio-management
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Quick Info
Category:Investing
Difficulty:intermediate
Last Updated:6/19/2025