Include your email address to get a message when this question is answered. Next, multiply each possible outcome by its probability. You toss a coin until a tail comes up. If you’re confused at this point — that is why it’s called a paradox. Fill in the data (I’m using Excel here, so the negative amounts are showing in red). Add the numbers together, and divide the sum by the number of numbers. 1/20 + 1/21 + 1/22 + 1/23 + 1/24 + 1/25. X is the number of trials and P(x) is the probability of success. Sample problem #1: The weights (X) of patients at a clinic (in pounds), are: 108, 110, 123, 134, 135, 145, 167, 187, 199. The probability density function is f(x) = 1/2x. The mean and the expected value are so closely related they are basically the same thing. The Paradox is this: There’s a simple betting game you can play where your winnings are always going to be bigger than the amount of money you bet. So the probability of a successful outcome is 1 in 36. Set this number aside for a moment. For the model investment situation, these calculations would look like this: 1. Step 4: Press Enter. CLICK HERE! Tip: You can only use the expected value discrete random variable formula if your function converges absolutely. What is the probability of getting a sum less than 3? In this case, the values are headed towards 2, so that is your EV. How much would you bet if you could always win? If you want to learn how to calculate the expected value of an investment, keep reading the article! P(x) * X. Chegg.com will match you with an online tutor, and your first 30 minutes is free! The probability that the first throw will come up even is 3 in 6. If you have a discrete random variable, read Expected value for a discrete random variable. That’s it! If you figure out the expected value (the expected payoff) for this game, your potential winnings are infinite. {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/5\/5a\/Calculate-an-Expected-Value-Step-1-Version-5.jpg\/v4-460px-Calculate-an-Expected-Value-Step-1-Version-5.jpg","bigUrl":"\/images\/thumb\/5\/5a\/Calculate-an-Expected-Value-Step-1-Version-5.jpg\/aid1612308-v4-728px-Calculate-an-Expected-Value-Step-1-Version-5.jpg","smallWidth":460,"smallHeight":345,"bigWidth":"728","bigHeight":"546","licensing":"

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\n<\/p><\/div>"}, Calculating the Expected Value of an Investment, {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/2\/25\/Calculate-an-Expected-Value-Step-7-Version-3.jpg\/v4-460px-Calculate-an-Expected-Value-Step-7-Version-3.jpg","bigUrl":"\/images\/thumb\/2\/25\/Calculate-an-Expected-Value-Step-7-Version-3.jpg\/aid1612308-v4-728px-Calculate-an-Expected-Value-Step-7-Version-3.jpg","smallWidth":460,"smallHeight":345,"bigWidth":"728","bigHeight":"546","licensing":"

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\n<\/p><\/div>"}, Finding the Expected Value of a Dice Game, {"smallUrl":"https:\/\/www.wikihow.com\/images\/thumb\/8\/80\/Calculate-an-Expected-Value-Step-13-Version-3.jpg\/v4-460px-Calculate-an-Expected-Value-Step-13-Version-3.jpg","bigUrl":"\/images\/thumb\/8\/80\/Calculate-an-Expected-Value-Step-13-Version-3.jpg\/aid1612308-v4-728px-Calculate-an-Expected-Value-Step-13-Version-3.jpg","smallWidth":460,"smallHeight":345,"bigWidth":"728","bigHeight":"546","licensing":"

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