Determine expected value
Find expected value based on calculated probabilities. Expected Value for a Discrete Random Variable. E(X)=\sum x_i p_i. x_i= value of the i th outcome p_i = probability of the i th outcome. According to this formula. Anticipated value for a given investment. In statistics and probability analysis, expected value is calculated by multiplying each of the possible outcomes by the. Multiply 1 by 2 to get: Once you roll the die, it has an equal one-sixth chance of landing on one, two, three, four, five or six. You might want to save your money! Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Select the Correct Variable Type. You might want to save your money! Calculating the expected value EV of a variety of possibilities is a statistical tool for determining the most likely result over time. Earn an amount equal to your investment 2. I also like that it shows the possibility of winning multiple prizes. A More Complicated Expected Value Example The logic of EV can be used to find solutions to more complicated problems. Learn Something New Every Day Email Address Sign Up. In some cases, you may play for free to assign a value to some or all possible outcomes. Things You'll Need Pencil. Assume one of the patients is chosen at random. Find the EV for the given situation by adding together the products determine expected value value times probability, for all possible outcomes. They are 1, 2, 3, 4, 5 and 6. All text shared under a Creative Commons License.