Expected value

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Expected value

The weighted average of a probability distribution. Also known as the mean value.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
is the mathematical expectation of the measured value in the interval [[a.sub.i], [b.sub.i]].
have dispersions equal to 1 and mathematical expectations equal to 0 both in the subensemble of events (with the fixed number of particles n) and, consequently, in the ensemble of the events (where n can take any possible values).
(2) SNR' varies with mathematical expectation E([c.sup.2]) inversely.
The mathematical expectation of the number of children of the families which they have one boy and one girl for the first time is equal to 3.
Hence, taking the mathematical expectation on both sides of (19) and then substituting (6) into 19) lead us to
In order to find the functional relationship between E(X) and [lambda], we compute the mathematical expectation of the intermeeting times based on the exponential distribution:
In the next section of paper we discuss results of development of algorithms which select the informative attributes of non-stationary object, where the simplified ratings of mathematical expectation, dispersion, functions of times series distribution are accepted as statistical parameters.
In this case, the index of K1 acquires the meaning of mathematical expectation in the law of Poisson.
Keynes explains: "Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die;--though fears of loss may have a basis no more reasonable than hopes of profit had before" ([1936] 1953, 162).
Substituting (25) into the expression of [Y.sub.m] above, taking the mathematical expectation, and noting that the vector p is independent of v(0) results in
If one is offered an equal [50:50] chance of getting 0 or 20,000 ducats, the mathematical expectation theory yields a value of: 0.5(0) + 0.5(20,000) = 10,000 ducats.

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