Consider the following game. You pick a card from a deck and each time you select an ace, you get $260. For all other cards you must pay $13. What is the expected value of the game?
A) -$12
B) $0
C) $8
D) $32

Question

Quizplus · Accepted Answer

The expected value (EV) of the game can be calculated by multiplying the value of each outcome by its probability and summing these products. There are 4 aces in a deck of 52 cards, so the probability of drawing an ace is 4/52 or 1/13. The probability of not drawing an ace is 48/52 or 12/13. The EV is thus (1/13)*$260 + (12/13)*(-$13) = $20 - $12 = $8.

Consider the Following Game