# 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 ?
So, its expected value [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] is also equal to [??]([mu] + [delta], ..., [mu] + [delta]) with probability 1, and thus, the equality that described that this estimate is unbiased takes the form
When comparing insurance policies of equal expected value, the coinsurance guarantee must be higher than the deductible guarantee, so switching from deductible to coinsurance will lead to more frequent claims of smaller sizes.
(3) But using monetary figures for the value of life the government itself has used, the expected value of a mortality risk of 1 in 100,000 is \$60.
Then, using Equation 11, the expected values of the two options are given by:
, [x.sub.n] with equal expected values and stated variances [[sigma].sub.1.sup.2], ...
The effect of price changes on individual expected values is summarized as:
A risk seeker would use maximax, a risk avoider would use maximin and the risk-neutral decisionmaker would use expected values. In effect, they are concerned with the most likely outcome, as the expected value is calculated by weighing up the possible outcomes by their probabilities and summing the result.
with the highest expected values. Certainly, then, the Burkean critique
Expected values are used to compare the general tendencies one can logically anticipate when selecting different alternatives in a decision problem.
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.
Expected value approach: The expected value of the cost of an environmental event is the estimate of the probability weighted-average over the range of all possible values where there are multiple possible outcomes, each with its own probability of occurrence.
In the new data's defense, Hemley notes that he and his colleagues used their measurement method on a variety of types of natural and synthetic diamonds of known hardness and obtained the expected values.

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