Question

A spinner game has a wheel with 25 numbers (0 through 24) in equally spaced slots. Consider a $1 bet on a number from 1 to 24. If your number hits, you have $24 returned to you; otherwise, you lose your $1 bet. Find the expected return for this bet. (Round your answer to two decimal places.)

Answer 1

The expected return for this bet is $0.04, rounded to two decimal places.

Step-by-step explanation:

To find the expected return for this bet, we need to calculate the average value of the return. The probability of hitting the selected number is 1/24, since there are 24 numbers to choose from. If the number hits, the return is $24. If it doesn't hit, the return is -$1 (the initial bet). Therefore, the expected return is calculated as:

Expected Return = (Probability of hitting * Return if hits) + (Probability of not hitting * Return if doesn't hit)

Expected Return = (1/24 * $24) + (23/24 * -$1) = $1 - $0.9583 = $0.0417

So, the expected return for this bet is $0.04, rounded to two decimal places.