An investor has a 35% chance of making $1,000 and a 65% chance of making $10,000, what is the expected payoff for this investor?
A) $11,000
B) $6,850
C) $7,500
D) None of the above

Question

Quizplus · Accepted Answer

The expected payoff is calculated by multiplying each outcome by its probability and summing the results: (0.35 * $1,000) + (0.65 * $10,000) = $350 + $6,500 = $6,850.

An Investor Has a 35% Chance of Making $1,000 and a 65