In a fair bet, the expected winnings exactly offset the expected losses. This means that the probability of winning is equal to the probability of losing and the expected value of the bet is zero. Therefore, neither party has an advantage over the other and the bet is considered fair. Choices A, B, and D are not applicable to a fair bet.

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In a Fair Bet, The

Question 12

Multiple Choice

In a fair bet, the:

A) outcome is known in advance so there is no uncertainty.
B) expected return is high enough to induce risk-averse people to accept the risk.
C) expected winnings exactly offset the expected losses.
D) expected winnings are greater than the expected losses.

Correct Answer: