Question

1. You enter a casino to play a game. The game has 3 possible outcomes, for every two dollars you bet, there is a 25% chance you win $2, a 30% chance you win $1 and the rest of the time you lose your bet. What is the expected value of your winnings?

Answer 1

The expected value of your winnings is $0.8

Step-by-step explanation:

Expected value is calculated by multiplying the probability with the value of each outcome and adding them all.

The value of the first outcome is 2 and the probability is 25% so the expected

The value of the second outcome is 1 and the probability is 30%.

The value of the third outcome is 0 and the probability is (100-(25+30)=100-55=45%

Expected value of winnings = (2*0.25)+(1*0.3)+(0*0.45)

=0.5+0.3+0

=0.8

The expected value of your winnings is $0.8