A gambler is trying to determine whether or not to make a bet. If he bets and wins, he will profit $2000. If he bets and loses,
1 answer:
Answer:
The gambler's expected value if he makes the bet is $45.
Step-by-step explanation:
Expected value:
15% probability of a profit of $2000.
100 - 15 = 85% probability of having to pay $300, that is, a loss of $300.
The expected value is each outcome multiplied by it's probability, so:
The gambler's expected value if he makes the bet is $45.
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