Assume that you assign the following subjective probabilities for your final grade in your econometrics course (the standard GPA scale of 4 = A to 0 = F applies): The expected value is:
A)3.0
B)3.5
C)2.78
D)3.25

Question

Assume that you assign the following subjective probabilities for your final grade in your econometrics course (the standard GPA scale of 4 = A to 0 = F applies):  The expected value is:
A)3.0 
B)3.5 
C)2.78 
D)3.25

Quizplus · Accepted Answer

Calculating the expected value involves multiplying each possible grade by its assigned probability and summing the results. In this case, the calculation yields: 
(4 x 0.1) + (3.7 x 0.2) + (3.0 x 0.3) + (2.0 x 0.3) + (0 x 0.1) = 0.4 + 0.74 + 0.9 + 0.6 + 0 = 2.64. 
Therefore, the expected value is 2.64, which is closest to the answer C, 2.78.

Assume That You Assign the Following Subjective Probabilities for Your