Expected Value Formula

About Expected Value Formula

The expected value formula is used in probability and statistics to calculate the expected value of a random variable X, represented by E(x). It's also known as the initial moment, average, or mean. In other words, the expected value is equal to the total of each conceivable event multiplied by its probability and is written as the expected value formula. If each option has an equal chance of occurring, the anticipated value is the arithmetic mean of all possible outcomes. Do check out more Maths Formulas. 

What Is the Expected Value Formula?

The expected value formula, which is an extension of the weighted average, is used to calculate the expected value. The expected value of a discrete random variable is computed using the expected value formula, which involves adding the random variable's value and its associated probability.

Expected Value Formula

For a random variable X, the expected value is given by

E(x)=c1p1+c2p2+c3p3+......+cnpn

where,

ci is the ith outcome of the random variable X and pi is the probability of the ci outcome and p1+p2+....+pn = 1

Expected Value Formula Applications:

  • It provides a short snapshot of any random variable's behaviour.
  • It is often used in finance since it represents the expected value of future investments.
  • used to make decisions in a variety of fields

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