To calculate the expected value, list all mutually exclusive outcomes, assign their stated monetary gains or losses, and ensure the probabilities sum to one. Then, compute the weighted mean by multiplying each outcome's value by its probability and summing these products.
Conditions: The outcomes are mutually exclusive.; The probabilities assigned to the outcomes sum to exactly one.; Monetary values are defined consistently, including any applicable costs.
To calculate the expected value, list all mutually exclusive outcomes, assign their stated monetary gains or losses, and ensure the probabilities sum to one. Then, compute the weighted mean by multiplying each outcome's value by its probability and summing these products.
Conditions: The outcomes are mutually exclusive.; The probabilities assigned to the outcomes sum to exactly one.; Monetary values are defined consistently, including any applicable costs.