Question

Flip a coin. If it lands heads up, you win $8. If it lands tails up, you lose $6. What is the expected value of this coin flip?

Answer 1

The expected value of this coin flip is $1.

Step-by-step explanation:

The expected value of a coin flip can be calculated by multiplying the value of each outcome by its probability and summing these values. In this case, the coin landing heads up has a probability of 1/2 and a value of $8, while the coin landing tails up has a probability of 1/2 and a value of -$6.

Therefore, the expected value is (1/2 * $8) + (1/2 * -$6) = $4 - $3 = $1.