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wariber [46]
3 years ago
15

Evaluate the expression:

Mathematics
1 answer:
pickupchik [31]3 years ago
5 0
9 is the answer

Step by step
....
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1. consider a lottery with three possible outcomes: $125 will be received with probability 0.25, $100 will be received with prob
tigry1 [53]

The lottery's anticipated worth is $80.

Given that,

The probability of receiving $125 is 0.25; the likelihood of receiving $100 is 0.3; and the likelihood of receiving $50 is 0.45.

A) EV=125*.2+100*.3+50*.5=$80

The lottery's anticipated worth is $80.

The expected value is obtained by multiplying each result by its likelihood.

The expected value of the lottery is then calculated by adding up all of these.

This is what we have: ;;

125(0.2) + 100(0.3) + 50(0.5) (0.5)

= 25 + 30 + 25 = $80

B) This is the formula for variance is shown in figure :

So, we can calculate the variance as follows:

.2*(125-80)^2+.3*(100-80)^2+.5*(50-80)^2=975

C) A risk-neutral person would pay $80 or less to play the lottery.

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