Page 196 - P1 Integrated Workbook STUDENT 2018
P. 196
Chapter 11
Expected values and attitudes to risk
2.1 Expected value
An expected value summarises all the different possible outcomes by calculating a
single weighted average. It is the long run average (mean).
p =
Expected value formula:
the probability of the
outcome occurring
future outcome
EV = ∑px
EV (Expected x =
value) the future outcome
= long run
weighted
average
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