Question

3. If you could choose one of the following results for your next crypto investment, which would you prefer?

*
A 100% chance of winning $100
A 50% chance of winning $500
A 25% chance of winning $1,000
A 5% chance of winning $10,000

Answer 1

In order to determine the preferred result for the next crypto investment, we need to calculate the expected value for each option. Option 4, with a 5% chance of winning $10,000, has the highest expected value of $500 and would be the preferred choice.

Step-by-step explanation:

In order to determine which result would be preferred for the next crypto investment, we need to consider the expected value of each option.

The expected value is calculated by multiplying the probability of each outcome by its respective value, and then summing these values. Let's calculate the expected value for each option:

1. Option 1: 100% chance of winning $100, so the expected value is 1 * $100 = $100.
2. Option 2: 50% chance of winning $500, so the expected value is 0.5 * $500 = $250.
3. Option 3: 25% chance of winning $1,000, so the expected value is 0.25 * $1,000 = $250.
4. Option 4: 5% chance of winning $10,000, so the expected value is 0.05 * $10,000 = $500.

Based on the calculations, option 4 has the highest expected value of $500, so it would be the preferred choice for the next crypto investment.