The Expected Value of a Basket with Different Outcomes Is

question 27

Multiple Choice

The expected value of a basket with different outcomes is

• A) the average of the values of the different outcomes.
• B) the average of the values of different outcomes multiplied by the average of the probabilities of the outcomes.
• C) the sum of the values of the different outcomes.
• D) the sum of the value of each outcome multiplied by its probability.

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Definitions:

Demonstrative Legacy

A specific bequest in a will, directing a particular sum of money to be paid out of a specified asset or fund.

Probate

The legal process through which a deceased person's will is validated, and their assets are distributed under the supervision of a court.

Resided

Generally means to live in a particular place, but in a financing context, it is NO.

Trustor

An individual or entity that creates a trust by transferring assets to a trustee, who manages the assets for the benefit of a third party, the beneficiary.