Question

On the average, how much would you expect to win by playing the following game? A 50% chance to win $2000, a 30% chance to lose $1000, and a 20% chance to lose $2000.

Answer 1

Answer:

Average expected chance of winning = $300

Explanation:

Average expectation to win shall be computed as follows

Chance to win = 50% of $2,000 = $1,000

Less: Chance of losing = 30% of $1,000 = -$300

         Chance of losing = 20% of $2,000 = -$400

This is basically computed with the help of probability distribution provided, and adding the entire products.

Average expected chance of winning = $1,000 -$300 - $400 = $300