Which of the following is a fair bet based on the toss of an unbiased coin?
A) head: receive $5, tail: lose $5
B) head: receive $2, tail: lose $3
C) head: receive $0.5, tail: lose $1
D) head: lose $3, tail: lose $3

Question

Quizplus · Accepted Answer

Option A is a fair bet because the expected value of the bet is zero, meaning the potential gain and loss are perfectly balanced. In a fair bet, the probability of winning is equal to the probability of losing, and the amount won or lost is the same. Since an unbiased coin has a 50% chance of landing on heads and a 50% chance of landing on tails, receiving $5 for heads and losing $5 for tails results in an expected value of $0, making it a fair bet.

Which of the Following Is a Fair Bet Based on the Toss