Question

A roulette wheel in Las Vegas has 38 possible outcomes. Of those 38 outcomes, 18 are red, 18 are black, and 2 are green. Suppose you bet 2 dollars on the outcome being red. Now, assume that the casino will return your investment and give you an additional 2 dollars if you win, but will keep your 2 dollars if you lose. How much money should you expect to win each game

Answer 1

Answer: Expected value = - 0.1026

Explanation:

Given that

Possible outcomes = 38

While the required outcome are red, 18 are black, and 2 are green

The probability of winning will be

18/ 38 = 0.474

Where winning will be

2 × 0.474 = 0.948

The probability of losing

20/38 = 0.5253

Where losing will be

- 2 × 0.5253 = -1.0506

Expected value = 0.948 + (- 1.0506)

Expected value = - 0.1026