Expected Value: The expected value of a random variable Y, denoted E(Y), is the long-run average value of the random variable over many repeated trails or occurrences.
The expected value of a discrete random variable is computed as a weighted average of the possible outcomes of that random variable, where the weights are the probabilities of that outcome. The expected value of Y is called the expectation of Y or the mean of Y and is denoted Uy.
Example: Suppose you loan a friend $100 at 10% interest. There is a 99% chance that your loan will be repaid. That means, when your loan gets repaid, you receive $110 ($100 principal + $10 loan) amount. And, also, there is 1% chance that your friend defaults, and you get paid $0. Thus, on average, you would be repaid, $110*0.99 + $0*0.01 = $108.90.
