Question

Four possibilities have probabilities 0.4, 0.2, 0.2 and 0.2 and values $40, $30, $20, and $10 respectively. The expected value is: a. ​$22 b. ​$28 c. ​$26 d. ​$24

Answer 1

Answer:

b. ​$28

Step-by-step explanation:

We have these following probabilities:

0.4 = 40% probability of $40

0.2 = 20% probability of $30

0.2 = 20% probability of $20

0.2 = 20% probability of $10

The expected value is:

We multiply each value by its probability. So

$E = 0.4*40 + 0.2*30 + 0.2*20 + 0.2*10 = 28$

So the correct answer is:

b. ​$28