What is the Expected Value?
Expected Value is a very critical term in Finance. We want to know the ‘Expected Value’ of some variables to estimate some things. Let's look at different perspectives of Expected Value. Firstly I have to explain that I try to use real examples when I talk about Expected Value. Because I think it will be more understandable than non-real examples. In the below table we see my BIST portfolio with weights at the end of July. I have 13 stocks and most of my money in BIMAS. When I want to invest my money in a public company, I want to know some critical information about that company. First of all I want to know that is that company is suitable for investment. I use some critical methods to learn this critical information. After this critical investigation, I estimated the price for that company. If I have an acceptable speard between my estimate and stock price, I invest my money. Let's look at the table below. In this table we see some ‘Expected Values’. These ‘Expected Values’ a...