Question

You plan to charge $1 for each time a student plays, and the payout for a win is $5. According to your calculations, the probability of a win is .05. What is your expected value for this game? The expected value

Answer 1

21.8

Explanation:

Step 1

This is a problem on finding the mean of continuous grouped data. We first find the midpoint of each interval. For example, the first interval or class is 0 - 10. The mid-point of this class will be (0 + 10)/2 = 5.

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Step 2

We now calculate the product of mid-point and frequency for each class. Here, the number of athletes in each class is the frequency of that class. For example, for the first class 0 – 10, its frequency is 3.

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Step 3

We can now use the formula to calculate mean. Note that t...

Answer 2

• - $0.75

Explanation:

For each game played the chance of winning is 0.05 and losing is 0.95.

If the student wins, they get $5 -$1 = $4, but they lose $1.

Expected value is:

• 4*0.05 - 1*0.95 = -0.75

It means you will make $0.75 per average game.