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Risk Management

(i) Central tendency or clustering - most probability
distributions tend to cluster around a film by the numbers
are particular value, which may not be in the middle of
the range of the possible distribution covers.

The widely used methods of calculating the value are the
arithmetic mean, the median, and to the mode of a
distribution.

The arithmetic mean is the more precise name given to
average, which is the sum of the items divided by the
number of items.

The only difference in calculation of arithmetic mean of
a probability distribution is that instead of dividing by
the number of items, each item in the probability
distribution is multiplied by its respective probability and
the sum of these products is divided by the sum of the
probabilities.

Because these arithmetic means do represent long run
average expectations, the arithmetic mean of a
probability distribution is usually referred to as the
expected value of that distribution.

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