Question

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

Answer 1

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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.