Question

I play a gambling game in which I will win different amounts of money with different likelihood's. Suppose that I win X dollars with a probability of P(X) (if C is negative I am losing money). The distribution is as follows: what is the appropriate value of P?

Answer 1

`p = 0.05`

Explanation:

Given

See attachment for the distribution

Required

Find p

To find p, we make use of:

`\sum P(x) = 1`

So, we have:

`0.50 + 0.25 + 0.13 + 0.07 + p = 1`

`0.95 + p = 1`

Make p the subject

`p = 1 - 0.95`

`p = 0.05`