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What does expected value represent, and how is it calculated?

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Emily CarrollAUG 11, 2023, 1:01:06 AM

Expected value gives you the long-term average outcome of an experiment. It may be a value which will never occur on any single trial. It is calculated by finding a weighted average of the numerical values of all possible outcomes, weighted by their respective probabilities.

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Brian Russell FoleyMAR 29, 2023, 4:15:31 PM

An average over time and is calculated using a summation of value and probability

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    Stephanie Lynn LeeMAR 27, 2023, 12:10:57 AM

    The average outcome for an experiment is calculated by multiplying the amount of each outcome by it's probability and then adding them all together.

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      Think you've got it?

      99% of the time, my company's website brings in $1,000 per day. If it gets hacked, which happens 1% of the time, the company will lose $100,000 per day. What is the expected value of this website for a single day?

      Select one of the following options:
      • A.

        +$1000

      • B.

        $10

      • C.

        $100,000

      • D.

        $3,650

      Submit answer

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