What is the expected value of an original Investment of $3,000 that has a 10% chance of ending up with a value of $2,000, an 80%

Question

3 years ago

13

chance of ending up with a value of $3,500, and a 10% chance of ending up with a value of $4,000?

1 answer:

Bond [772] · Answer 1 · 2022-07-09T21:16:46+03:00

Bond [772]3 years ago

8 0

9514 1404 393

Answer:

$3,400

Step-by-step explanation:

The expected value is the sum of products of the value and its probability:

E = 2000(0.1) +3500(0.8) +4000(0.1) = 200 +2800 +400 = 3400

The expected value of the investment is $3,400.