Question

Use the probability model above to determine the successful outcome’s contribution to the expected value of the return.

A.
–$630
B.
–$540
C.
$540
D.
$630

Answer 1

Answer: Hence, Option 'D' is correct.

Explanation:

Since we have given that

Probability of successful outcome = 0.7

Probability of unsuccessful outcome = 0.3

Amount he get for successful outcome = $900

Amount he lost for unsuccessful outcome = -$1800

We need to find the expected value of return when there is successful outcome:

P(Success)× Amount for successful

`0.7* \$900\\\\=\$630`

Hence, Option 'D' is correct.