A risky outcome's expected value is:
A) the value of the most likely outcome.
B) the mid-point of the extreme (high and low) possible values.
C) the degree of dispersion of the possible outcomes.
D) the sum of the products of the probabilities of all outcomes and their values.
E) the equally-weighted average of all outcomes.

Question

Quizplus · Accepted Answer

The expected value of a risky outcome is calculated by finding the sum of the products of the probabilities of each outcome and their values. This takes into account all possible outcomes and their likelihood of occurring, providing an accurate measure of the expected value of the risky outcome.

A Risky Outcome's Expected Value Is