Sources
Help build the largest human-edited directory on the web.
Submit a site - Become an editor
Wikipedia. Licensed under the GNU Free Documentation License.
Are you an expert in this subject? Join the discussion and share your knowledge at Wikipedia.org.
Expected return
From Wikipedia, the free encyclopedia
The expected return is the weighted-average most likely outcome in gambling, probability theory, economics or finance.
In gambling and probability theory, there is usually a discrete set of possible outcomes. In this case, expected return is a measure of the relative balance of win or loss weighted by their chances of occurring.
For example, if a fair die is thrown and numbers 1 and 2 win ¤1, but 3-6 lose ¤0.5, then the expected gain per throw is
- ¤1 × 1/3 - ¤0.5 × 2/3 = ¤0:
the game is thus fair.
In economics and finance, it is more likely that the set of possible outcomes is continuous (a numerical or currency value between 0 and infinity). In this case, simplifying assumptions are made about the distribution of possible outcomes. Either a continuous probability function is constructed, or a discrete probability distribution is assumed
 |
This economics or finance-related article is a stub. You can help Wikipedia by expanding it. |