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Expected Value |
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Expected value The weighted average of a probability distribution. Also known as the mean value. Expected Value The return on an investment as estimated by an asset pricing model. It is calculated by taking the average of the probability distribution of all possible returns. To give a very simple example, a model might state that an investment has a 10% chance of a 100% return and a 90% chance of a 50% return. The expected rate of return is calculated as: Expected Value = 0.1(1) + 0.9(0.5) = 0.55 = 55%. It is important to note that there is no guarantee that the expected rate of return and the actual return will be the same. Statistically, the expected value is the mean value of the probability distribution. It is also called the expected rate of return. See also: Abnormal return. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| ? Mentioned in | ? References in periodicals archive | ||
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| An SMR is the ratio of observed number of cases to expected number of cases. The observed number of cases in Lauenburg during 1990-1998 is very close to the expected number derived when using national referent rates (SIR = 1. The expected number in that time period for the census tract is less than one. |
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