What describes the likelihood of achieving a financial gain in a venture?

The term that describes the likelihood of achieving a financial gain in a venture is expected value. Expected value is a statistical concept used to determine the average outcome of a decision when there are various outcomes that have different probabilities. It is computed by multiplying each possible outcome by its probability and summing these products. This makes expected value a valuable tool for assessing the potential financial success of a venture.

In the context of business and finance, expected value helps investors and decision-makers evaluate the overall benefit of pursuing certain opportunities by providing a numeric representation of potential gains and losses based on likelihood. It allows individuals to make informed choices about whether a venture is worth the risk based on the calculated average expected financial outcome.

While risk analysis and return on investment (ROI) are related concepts, they focus on assessing risks associated with investments and measuring the gains in relation to the invested amount, respectively, rather than specifically quantifying the likelihood of financial gain. Probability ratio is not a standard term in finance in this context.