Suppose someone offers Max the following gamble: with probability 0.50 he will win $10 and with probability 0.50 he will lose $8. The expected value of this gamble is:
A)$5.
B)$2.
C)$1.
D)$0.

Name: Suppose someone offers Max the following gamble: with probability 0.50 he will win $10 and with probability 0.50 he will lose $8. The expected value of this gamble is: A)$5. B)$2. C)$1. D)$0.
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Question

Quizplus · Accepted Answer

The expected value of this gamble is $1 = (0.50)($10)+ (0.50)(-$8).

Suppose Someone Offers Max the Following Gamble: with Probability 0