DEFINITION of 'Expected Value'
Anticipated value for a given investment. In statistics and probability analysis, expected value is calculated by multiplying each of the possible outcomes by the likelihood that each outcome will occur, and summing all of those values. By calculating expected values, investors can choose the scenario that is most likely to give them their desired outcome.
INVESTOPEDIA EXPLAINS 'Expected Value'
Scenario analysis is one technique for calculating the expected value of an investment opportunity. It uses estimated probabilities with multivariate models, to examine possible outcomes for a proposed investment. Scenario analysis also helps investors determine whether they are taking on an appropriate level of risk, given the likely outcome of the investment.
RELATED TERMS

Perceived Value
The worth that a product or service has in the mind of the consumer. ... 
Extrinsic Value
The difference between an option's market price and its intrinsic ... 
Mean Return
1. In securities analysis, it is the expected value, or mean, ... 
Scenario Analysis
The process of estimating the expected value of a portfolio after ... 
Intrinsic Value
1. The actual value of a company or an asset based on an underlying ... 
Sharpe Ratio
A ratio developed by Nobel laureate William F. Sharpe to measure ...
Related Articles

Investing Basics
5 Things To Know About Asset Allocation
Overwhelmed by investment options? Learn how to create an asset allocation strategy that works for you. 
Bonds & Fixed Income
Find The Highest Returns With The Sharpe Ratio
Learn how to follow the efficient frontier to increase your chances of successful investing. 
Mutual Funds & ETFs
Understanding Volatility Measurements
How do you choose a fund with an optimal riskreward combination? We teach you about standard deviation, beta and more! 
Fundamental Analysis
Scenario Analysis Provides Glimpse Of Portfolio Potential
This statistical method estimates how far a stock might fall in a worstcase scenario. 
Mutual Funds & ETFs
How To Choose The Right ETF?
Choosing the right ETF really isn’t that complicated. If you stay focused on a few key areas, you may find the experience to be much easier. 
Bonds & Fixed Income
How to Diversify with Muni Bond ETFs
Thinking of diversifying with bonds? Consider these muni bond ETFs. 
Mutual Funds & ETFs
How To Build A Bond Ladder?
Bond laddering is a strategy used when building a portfolio: an investor can spread out interest rate risk and create a stream of cash flows for income. 
Fundamental Analysis
How Investment Risk Is Quantified
FInancial advisors and wealth management firms use a variety of tools based in Modern portfolio theory to quantify investment risk. 
Fundamental Analysis
What is a Null Hypothesis?
In statistics, a null hypothesis is assumed true until proven otherwise. 
Investing
Rethinking About Retirement Investing?
There are plenty of reasons to rethink your retirement investing, wherever you fall on the spectrum between fatalistic acceptance and cheerful confidence.