What is the difference between Average and Weighted Average?

The average is an estimated measure that you come to by taking the total lowest and highest and meeting somewhere in the middle. For example, someone’s average test scores in a class are figured out this way. Suppose the lowest score the person received on most of their tests is a C, and the highest score the person received on most of their tests is an A.

In that case, the logical conclusion is that overall, this is a B average student. On the other hand, the weighted average is also the average weight of the class. This scenario means that the sum of the number of observations divided by the number of observations is the weighted average.

Each examination is multiplied by its weight and then add up. The weighted aspect of it is the fact that some observations are more important than others.

The term average is used mostly in mathematics, most especially in statistics, to find the middle value of a given data set. At times, the average of a given data set can also be called the central tendency. For a data set with few elements, the average is the value in the middle. However, you will to first arrange the data either in an ascending or descending order. It is necessary so you can get an accurate answer. At times, the average of a given data set can be calculated using formulas. The weighted average, on the other hand, can be calculated by taking into consideration the importance of some values in a data set. As a result, each value is multiplied by an assumed weight before the real average of the data set is calculated. The meaning of the weighted average can be a little bit different in finance.

One of the main differences between an average and a weighted average is that when you say average, this would refer to adding the different numbers that are available. For example, when you are computing grades. You just need to add the different numbers that are available and then divide them by the number of items that you have computed. When you say weighted average, this means that for every observation value that is available, there will be a frequency assigned to each one. Take note that the formula for the weighted average is the sum of all the given variables multiplied by the weight.