Expected Value and Conditional Probability

Front

What is the definition of Expected Value in probability?

Back

Expected Value (EV) is the long-term average value of a random variable, calculated as the sum of all possible values, each multiplied by their respective probabilities.

Front

How do you calculate the Expected Value of a discrete random variable?

Back

To calculate the Expected Value of a discrete random variable, multiply each possible outcome by its probability and sum all these products.

Front

What is Conditional Probability?

Back

Conditional Probability is the probability of an event occurring given that another event has already occurred.

Front

How is Conditional Probability calculated?

Back

Conditional Probability is calculated using the formula P(A|B) = P(A and B) / P(B), where P(A|B) is the probability of event A given event B.

Front

What is the formula for calculating the Expected Value of a spinner?

Back

The Expected Value of a spinner is calculated by multiplying each outcome by its probability and summing these products.

Front

What does it mean if the Expected Value is negative?

Back

A negative Expected Value indicates that, on average, the outcome of the random variable will result in a loss.

Front

What is the relationship between Expected Value and risk?

Back

The Expected Value helps assess the risk of a decision by providing an average outcome, allowing for comparison of different options.

Front

What is the probability of an event?

Back

The probability of an event is a measure of the likelihood that the event will occur, expressed as a number between 0 and 1.

Front

How do you interpret a probability of 1/2?

Back

A probability of 1/2 means that there is an equal chance of the event occurring or not occurring.

Front

What is the significance of the total probability in a probability distribution?

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The total probability in a probability distribution must equal 1, representing the certainty that one of the possible outcomes will occur.