Question

Given the following probability distribution calculate the expected value for the distribution Loss Outcome Probability -3 10% -5 35% -6 55%

A) -5.35
B) -4.75
C) -5.25
D) -6.25

Answer 1

To calculate the expected value, multiply each outcome by its probability and sum the results. The expected value for the given probability distribution is -5.35.

Step-by-step explanation:

To calculate the expected value, we multiply each outcome by its respective probability and sum the results.

Expected Value = (-3)(0.10) + (-5)(0.35) + (-6)(0.55) = -0.30 + -1.75 + -3.30 = -5.35

Therefore, the expected value for the distribution is -5.35.