Question

Find the expected value of the winnings

Answer 1

The expected value of the winnings from the game is $4

How to determine the expected value?

The payout probability distribution is given as:

Payout ($) 2 4 6 8 10

Probability 0.5 0.2 0.15 0.1 0.05

The expected value is then calculated as:

$E(x) = \sum x * P(x)$

This gives

E(x) = 2 * 0.5 + 4 * 0.2 + 6 * 0.15 + 8 * 0.1 + 10 * 0.05

Evaluate the expression

E(x) = 4

Hence, the expected value of the winnings from the game is $4

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