A dealership paid $8,000 for a car at an
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Answer:
The expected value of betting $500 on red is $463.7.
Step-by-step explanation:
There is not a fair game. This can be demostrated by the expected value of betting a sum of money on red, for example.
The expected value is calculated as:
being G the profit of each possible result.
If we bet $500, the possible outcomes are:
- <em>Winning</em>. We get G_w=$1,000. This happens when the roulette's ball falls in a red place. The probability of this can be calculated dividing the red slots (half of 36) by the total slots (38) of the roulette:
- <em>Losing</em>. We get G_l=$0. This happens when the ball does not fall in a red place. The probability of this is the complementary of winning, so we have:
Then, we can calculate the expected value as:
We expect to win $463.7 for every $500 we bet on red, so we are losing in average $36.3 per $500 bet.