Question

A certain game involves tossing 3 fair coins, and it pays .14 for 3 heads, .06 for 2 heads, and .01 for 1 head. The expected winnings are?

Answer 1

Total expected amount = $0.04375

Explanation:

We need to calculate probability of getting heads on every combination of coin tosses

HHH = 1/8 = 3 heads

HHT = 1/8 = 2 heads

HTH = 1/8 = 2 heads

HTT = 1/8 = 1 head

THH = 1/8 = 2 heads

THT = 1/8 = 1 head

TTH = 1/8 = 1 head

TTT = 1/8 = 0 head

So the probability of 3 heads is 1/8 and the amount is (1/8)* 0.14 = $0.0175

Probability of 2 heads is 3/8 and the amount is (3/8) * 0.06 = $0.0225

Probability of 1 head is 3/8 and amount is (3/8) * 0.01 = $0.00375

Total expected amount = 0.00375 + 0.0225 + 0.0175

Total expected amount = $0.04375