Question

The probability that Mary will win a game is 0.05, so the probability that she will not win is 0.95. If Mary wins, she will be given $140; if she loses, she must pay $9. If X = amount of money Mary wins (or loses), what is the expected value of X? (Round your answer to the nearest cent.)

Answer 1

X = (Probability of winning x winning amount) + (probability of losing x losing amount)

The amount she pays would be a negative value.

X = (0.05 * 140) + (0.98 * -9)

X = 7 + -8.82  

X = -1.82