Expected Value Review Sheet
Expected value review sheet for EV formulas, fair price, conditional EV, stopping, variance, utility, and final interview checks.
Candidates consolidating expected-value prep before interviews.
Core formula
Expected value is the sum of each payoff times its probability. Use net payoffs when costs or fees exist.
Fair price
In a simple risk-neutral toy model, fair price equals expected payoff. State assumptions before using this shortcut.
Conditional EV
After information arrives, update the distribution first. Conditional expected value uses the new information set.
Stopping and decisions
For stop-or-continue prompts, compare current value with continuation value, often working backward from the final decision.
Risk and utility
High expected value does not always imply the best choice when variance, downside, utility, or constraints matter.
Final checks
Check probabilities sum correctly, payoffs have the right signs, and the answer changes sensibly under extreme cases.
Practice the pattern
Use the LeetQuidity curriculum and calibration to turn this topic into a focused practice plan.