Question

A game involves tossing a biased coin that has a 60% probability of landing on heads. If a player wins $50 when heads appears, what is the expected value of a player's winnings?

Answer 1

Probability of winning = 0.6 , Probability losing = 1-0.6 = 0.4

Expected value = 50(0.6) - 1(0.4)  =  $29.6

The interpreation of this is that if you play many times you would expect a profit of $29.6.