Expected value


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Expected value

The weighted average of a probability distribution. Also known as the mean value.

Expected Return

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. For 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 return is calculated as:

Expected Return = 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. See also: Abnormal return.
References in periodicals archive ?
claim's expected value with the presumption of validity will be
On the one hand, I recognize that a special rule may be necessary in cases where it is difficult to determine whether the expected value of harm will exceed a minimal amount--that is, in cases not just where the probability of harm is low but where the magnitude of harm is large (even catastrophic) and where the harm is irreversible.
The expected value of the lottery to entrant i is equal to the vertical segment (a, b), and expected consumer surplus is equal to the area of the triangle ([phi]bP(0), P*, c), where [phi] represents the probability of being drawn and c is one point on the entry function.
19) the average difference across the 200 data points between the utility of the expected value and the expected value of the utility is again statistically significantly different from zero with a t-statistic of 15.
While it is true that setting expected values can never be perfect, the methods of deriving values can be improved through the application of technologies.
Following the ISO Guide, the result y and uncertainty u(y) determined from the systematic laboratory-effects model (3) are interpreted as the expected value and standard deviation of a state-of-knowledge distribution for the values that could reasonably be attributed to Y based on the data [x.
Another alternative is to employ a mixed criterion, when something between expected value and minimax loss is used to decide between human and automation.
The variance can be also obtained numerically as in the case of the expected value.
Proposition 2: The expected values of total and consumer's surplus produced by a MC firm will always be at least as high as those produced by a perfectly competitive firm and will usually be higher.
Now, take the expected value of RIV: (5) [Mathematical Expression Omitted]
Then, it calculates the expected value by first computing the probabilities of the alternative rate scenarios under differing levels of yield volatility.
Several assumptions are made to convert m, a, and b into estimates of the expected value and variance of the elapsed time required by the activity.