What is the Expected Monetary Value (EMV) of a risk event with probability 15% and monetary value $800,000?

What is the Expected Monetary Value (EMV) of a risk event with probability 15% and monetary value $800,000?

• A. $120,000
• B. $1,200,000
• C. $80,000
• D. $240,000

Answer: (A)

Expected Monetary Value measures the average impact you’d expect per occurrence of a risk event if it could happen repeatedly. It’s found by multiplying how likely the event is by how much money is at stake if it happens. Here, the probability is 15% (0.15) and the monetary value is $800,000. Multiply them: 0.15 × 800,000 = 120,000. So the EMV is $120,000. This reflects the average cost per event; it’s not the guaranteed loss, but the long-run expectation when the risk is considered across many opportunities.

Expected Monetary Value measures the average impact you’d expect per occurrence of a risk event if it could happen repeatedly. It’s found by multiplying how likely the event is by how much money is at stake if it happens. Here, the probability is 15% (0.15) and the monetary value is $800,000. Multiply them: 0.15 × 800,000 = 120,000. So the EMV is $120,000. This reflects the average cost per event; it’s not the guaranteed loss, but the long-run expectation when the risk is considered across many opportunities.