Question

1. Consider a lottery with three possible outcomes:-$125 will be received with probability 0.2-$100 will be received with probability 0.3-$50 will be received with probability 0.5a. What is the expected value of the lottery

Answer 1

The expected value of the lottery is $80

Explanation:

To get the expected value, we have to multiply each outcome by its probability

Then we proceed to add up all of these to get the expected value of the lottery

we have this as ;;

125(0.2) + 100(0.3) + 50(0.5)

= 25 + 30 + 25 = $80