What is the expected value of product?

The expected value of the sum of several random variables is equal to the sum of their expectations, e.g., E[X+Y] = E[X]+ E[Y] . On the other hand, the expected value of the product of two random variables is not necessarily the product of the expected values.

What is an example of expected value?

Expected value is the average value of a random variable over a large number of experiments. So, for example, if our random variable were the number obtained by rolling a fair 3-sided die, the expected value would be (1 * 1/3) + (2 * 1/3) + (3 * 1/3) = 2.

What is the expected value of the product of two random variables?

In general, the expected value of the product of two random variables need not be equal to the product of their expectations. However, this holds when the random variables are independent: Theorem 5 For any two independent random variables, X1 and X2, E[X1 · X2] = E[X1] · E[X2].

What does expected value mean in math?

expected value. n. (Statistics) statistics the sum or integral of all possible values of a random variable, or any given function of it, multiplied by the respective probabilities of the values of the variable.

What is expected value method?

The expected value method estimates variable consideration based on the range of possible outcomes and the probabilities of each outcome. This method might be most appropriate when an entity has a large number of contracts that have similar characteristics.

What is expected value in economics?

In econometrics , the expected value (or mean) of a random variable provides a measure of central tendency, which means that it provides one measurement of where the data tends to cluster. The expected value is the average of a random variable. If you have a discrete random variable, you can calculate the expected value with the equation.

What is expectation value?

Expectation value is the average value of an unknown variable obtained from a large amount of experiments.