Answer:
An estimate of the probability that Jorge will make a profit is (5; 0.496)
Step-by-step explanation:
The total cost = 170x1 = $170
The payoff is $35 per $1 bet
The number of wins needed to make a profit = 170/35 = 4.86 \approx 5
Probability of winning, P(win), p = 1/38
n = 170
P(Jorge will make a profit) = P(at least 5 wins)
mean = np = 4.47
standard deviation = \sqrt{npq} = 2.09
P(X \geq 5) = 1 - P(X < 5)
P(X < A) = 1 - P(Z < (A - mean)/standard deviation)
After the application of continuity correction,
P(X \geq 5) = 1 - P(Z < (4.5 - 4.47)/2.09)
= 1 - P(Z < 0.01)
= 1 - 0.5040
P(X \geq 5 = 0.496
An estimate of the probability that Jorge will make a profit is (5; 0.496)
