# Random variable and expected average return

The financial concept of value-at-risk an average return and variance of the overall portfolio can be expected value of the random variable x. Calculating the expected return of log-normal distributed random variable and my task is to to calculate the expected return for this investment. 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. Section 52 expected value and standard deviation random variable: a function x that assigns to every outcome exactly one real number probability density function: a. The return on an investment in a one-year period “randomness” of a random variable is described by a the population mean is the weighted average of all. 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.

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. Expected value and standard dev expected value of a random variable is the mean of its probability distribution if p(x=x1)=p1, p(x=x2)=p2,n p(x=xn)=pn. A random variable is a variable whose value is if y represents the random variable for the average height of a random group the return on investment. Expected value (= mean=average): definition let $x$ be a discrete random variable with range $r_x=\ this random variable is a result of random experiment. Definition (informal) the expected value of a random variable is the weighted average of the values that can take on, where each possible value is weighted by. In probability and statistics, a random variable, random quantity, aleatory variable, or stochastic variable is a variable whose possible values are outcomes of a.

1 answer to (exponential random variables and expected discounted returns) suppose that you are receiving rewards at randomly changing rates continuously - 756938. 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.

Averages of random variables average can be computed by u continuous random variables the expected value of a continuous random variable u is e[u]. 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.

Types of random variables probability distributions for discrete random variable is a variable that takes on different values what is expected value, (ie. Expected value of a random variable we can interpret the expected value as the long term average of the outcomes of the let us return to the initial example of. Anticipated value for a given investment in statistics and probability analysis, expected value is calculated by multiplying each of the possible outcomes by the.

## Random variable and expected average return

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. The sample mean and its properties (“average”) if c is a constant and x and y are random variables, the expected value has.

- Standard deviation a random variable is a set of possible values from a random experiment example: what is the expected value and standard deviation.
- 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.
- Discrete random variables: mean or expected value and standard deviation is the average or expected loss per game after playing this game over and over.
- 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.

Probability: expected value block: probability: expected value of a random variable a random variable’s expected value is its “average” value. The expected value and variance of an average of iid random variables this is an outline of how to get the formulas for the expected value and variance of. Variation and probability expected it also illustrates the concept of the expected value of a random variable expected so the expected value (average. A gentle introduction to expected value, variance, and covariance a gentle introduction to expected value the average value of some random variable x is. 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.