
average of several figures giving greater weight to some, e.g. av. return on investment funds


weighted average


	  w1 x r1
	+ w2 x r2
	+ w3 x r3
	+ w4 x r4
	
	/(w1+w2+w3+w4)
	
	
	e.g. 	fund 1     100M, 3.2%
			fund 2     25M, 8.7%
			
			
			av. return
			
				(100 x .032 + 25 x .087) / (100+25)
				
				= 4.3%
				
				
				net return over entire investment assets
				
				
			use where a simple average without giving greater weight to some figures would give a deceptive result, e.g. fund 1   950M, fund 2  5M


simple average


	a
	b
	c
	d


	av = (a+b+c+d) / number_of_items





notes


1.	an average of average figures generally generates an incorrect result.


	e.g.


				av. value 1

		state a		12.3
		state b		3.23
		state c		2.43
		state d		32.1


		overall average	21.3



	calculate an overall average from the original figures, not from an average of other average figures


		
2. when compounding, compound each individual item and then calculate the difference, don't compound a difference figure across multiple time periods
			
	