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Data & Analytics · Intermediate

Expected Value (EV)

The probability-weighted average of all possible outcomes of a random variable: E[X] = Σ x × P(x).

Definition

Expected value guides decisions under uncertainty, such as expected monetary value in risk analysis or the expected profit of a campaign.

Example

A 30% chance of +$100k and a 70% chance of -$20k gives EV = $16k.

Exam tip

EMV in project risk analysis is the same calculation as expected value.

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