Expected Value for Discrete Events

#probability #interview

Expected Value

Expected value for discrete events is the summation of outcome and the probability of that outcome.

Formula of Expected Value (Discrete Events)

$E (x) = \sum x P (x)$

For example, lets say, the probability of Argentina wins is 90% and France wins is 10%.
And if Argentina wins I get $1000 and if France wins I have to give $2000.
Then my Expected win will be,

\begin{aligned} E (b e t) & = 1000 * 0.9 + (- 2000) * 0.1 \\ = 900 - 200 \\ = 700 \end{aligned}

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