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Expected value of a loss - probability - statistics

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Suppose the losses due to exchange rate fluctuation to XYZ Inc have the following distribution
$2,000,000 with probability of 0.05
$1,000,000 with probability of 0.08
Loss = $ 800,000 with probability of 0.15
$ 20,000 with probability of 0.12
$ 0 with probability of 0.60
What is the expected value of loss due to exchange rate change?

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Solution Summary

This solution provides the computations in excel to provide the student with a template for future problems.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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