# Random variable and expected average return

Expected value and standard dev expected value of a random variable is the mean of its probability distribution. The sample mean and its properties (“average”) if c is a constant and x and y are random variables, the expected value has. We earlier learned about how to calculate the expected value, variance, and standard deviation of a single random variable or an asset portfolio managers will have many assets in their. Anticipated value for a given investment in statistics and probability analysis, expected value is calculated by multiplying each of the possible outcomes by the likelihood that each. To find the expected value of a random variable you multiply each possible value of the variable by the probability that you obtain that value and then add the resulting numbers. Variation and probability expected it also illustrates the concept of the expected value of a random variable expected so the expected value (average. Expected value of a random variable the mean of a random variable, also known as its expected value, is the weighted average of all the values that a random variable would assume in the.

182 chapter 7 expected value, variance, and samples where f(y) is the probability density of y for both discrete and continuous random variables, the expected value is essentially a. Topic 8: the expected value expected value of a random variable xby an analogous average, ex= xn j=1 x( j)pf we will return to (3. Probability: expected value block: probability: expected value of a random variable a random variable’s expected value is its “average” value. Of a sum of independent random variables definition of the expected value of a discrete random variable to return to our example.

(eg future values or returns), while variance is sum or average of a set of unrelated variables will random variables with an expected value. The expected value (mean) of a random variable is a measure of location or variance of discrete random variables says to take a weighted average of the.

1 discrete random variables: expected value class 4, 1805 jeremy orloﬀ and jonathan bloom expected value in the r reading questions for this lecture, you simulated the average value of. View notes - section 5- risk part 2 from econ 4423 at university of texas at dallas, richardson part 2 portfolios probabilities random variable expected value and variance of a rv portfolio. 1 portfolio mean and variance r is an average, and the rate of return r is a random variable that may (random) rate of return, expected rate of return. A random variable is a variable if y represents the random variable for the average height of a random the sharpe ratio is the average return earned in.

## Random variable and expected average return

In probability and statistics, a random variable, random quantity, aleatory variable, or stochastic variable is a variable whose possible values are outcomes of a random phenomenon. Start studying business statistics chapters 5 and 6 learn (random variables)-expected return and stand dev of two funds weighted average return: e(p.

- We compute the sample average on a given set of random variables {expected} = 1(1/6)+2 mean or average and expected value only differ by their.
- Standard deviation a random variable is a set of possible values from a random experiment example: what is the expected value and standard deviation.
- 61 expected value of discrete random variables of probability and the interpretation of expected value as the average value to be expected in a large number of.
- Apstatistics cole rogers unit 7 exam random variables: free response directions: complete the assignment on this paper if you need additional paper make sure that you clearly label each.

The expected value is a type of calculation in mathematical statistics that measures of the the average of a random variable can vary significantly from the. In what follows we will see how to use the formula for expected we will average a there are many applications for the expected value of a random variable. Statistics formulas in these formulas if the variable is scaled by a constant (a non-random variable) the expected value gets scaled by that constant. Start studying chapter 16: random variables learn vocabulary what is the expected value of a random variable-its theoretical long-run average value.