Question

In a game of chance, the probability of winning a $50 is 40% and the probability of losing a $50 prize is 60%. what is the expected value of the prize in the game? $15 $25 $0 -$10

Answer 1

To calculate expected value,
We can add up the probability of all possible events.
The 2 possible events are either winning $50 or losing the prize, which is $ - 50
Expected value =
50 x 40 % + (-50) x 60%
= $-10
So the answer is $-10