Question

there is a raffle ticket for a $630 prize out of 100 tickets one ticket will win the prize and the remaining tickets will win nothing if you have a ticket what is the excepted payoff

Answer 1

Since 1 ticket has a payoff of $ 630 the probability of winning $ 630 is:

`(1)/(100)=0.01`

then,

`P(630)=0.01`

Since the 99 remaining tickets have a payoff of $0, the probability of winning $0 is:

`P(0)=0.99`

To find E(x), the expected value of x, find k⋅P(k) for each value k that x can take. Then sum these terms.

`\begin{gathered} x* P(x)=0*0.00=0 \\ x* P(x)=630*0.01=6.3 \end{gathered}`

therefore:

`E(x)=0+6.3=6.3`

this is the expected payoff is $6.3

answer: $6.3