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Expected Value Solution Slide 2

In this gambling game, a player is paid $3 for drawing a jack or queen, $5 for drawing a king or ace, and loses otherwise. To make the game fair, the player should pay the expected value of their winnings, which is $0.

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Sadman Siam
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91 views8 pages

Expected Value Solution Slide 2

In this gambling game, a player is paid $3 for drawing a jack or queen, $5 for drawing a king or ace, and loses otherwise. To make the game fair, the player should pay the expected value of their winnings, which is $0.

Uploaded by

Sadman Siam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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In a gambling game, a woman is paid 3 if she draws a jack or a queen and 5 if she draws a king or an ace from an

ordinary deck of 52 playing cards. If she draws any other card, she loses. How much should she pay to play if the game is
fair?
An attendant at a car wash is paid according to
the number of cars that pass through. Suppose the
probabilities are 1/12, 1/12, 1/4, 1/4, 1/6, and 1/6,
respectively, that the attendant receives $7, $9, $11,
$13, $15, or $17 between 4:00 P.M. and 5:00 P.M. on
any sunny Friday. Find the attendant’s expected earnings for this particular period.
By investing in a particular stock, a person can Suppose that an antique jewelry dealer is interested in
make a profit in one year of $4000 with probability 0.3 purchasing a gold necklace for which the probabilities
or take a loss of $1000 with probability 0.7. What is are 0.22, 0.36, 0.28, and 0.14, respectively, that
this person’s expected gain she will be able to sell it for a profit of $250, sell it for
a profit of $150, break even, or sell it for a loss of
$150.
What is her expected profit
A private pilot wishes to insure his airplane for
$200,000. The insurance company estimates that a total loss will occur
with probability 0.002, a 50% loss
with probability 0.01, and a 25% loss with probability 0.1. Ignoring all
other partial losses, what premium
should the insurance company charge each year to realize an average
profit of $500?

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