Expected Value

Expected value is the probability weighted average of the possible outcomes. More probable outcomes will have more weight.

In finance, expected value is used a lot. E.g. "expected value of earnings per share", "dividend per share", "rate of return", etc
- E(X) = P(x_1)x_1 + P(x_2)x_2 + ... + P(x_n)x_n

Source:

• 202009011233 Statistics - Khan Academy

Tags:

• statistics
• decision-making

Relevant:

• 113.023 Statistics - Variance, Standard Deviation
• 202011211245 Expected value and Economic Decision Making
• 202011211629 PV marginal utility
• 115.020.30.06 Reading 8 - 6. Expected Value, Variance, and Standard Deviation of a Random Variable
• 116.059 Life Lessons - Make your decisions as expected value calculations
• 113.036.01 Expected Value - example using insurance purchase decision
• 113.036.02 Expected Value - example for concert promoter and weather
• 113.036.03 Expected Value - example for workouts in a week
• 126.002 Decision Making - Economic Decision Making