A calculation using all of the observations of a variable with each observation being assigned a weight. The weight is the relative importance of that observation. Each observation is multiplied by its weight. The sum of those products is divided by the sum of the weights. If all of the weights are equal, the result is the average most commonly used. As an example, there are three observations of some variable – 0, 1 and 2. If the weights applied to each of them is the same, e.g., 1, the weighted average is the sum of the three observations divided by the sum of the weights or (0+1+2)/(1+1+1) = 3/3 = 1. If the weight given to 1 and 2 is still 1, but the weight given to 0 is increased to 4, the calculation becomes (4*0 + 1*1 + 1*2)/(4+1+1) = 3/6 = 0.5.
I am also a retired property-casualty A professional who assesses and manages the risks of financial investments, insurance policies and other potentially risky ventures. Source: www.investopedia.com/terms/a/actuary.asp More (someone who works with the math and statistics related to insurance). I spent a significant portion of my career building statistical models of all of the financial risks of an insurance company and interpreting their findings to help senior management make better financial decisions. I retired in my late 50’s, which one of my daughter’s friends thought clearly qualified me to write this blog. Read more about Susie Q