It costs $1,000 to enter the following game of chance,which is based on the outcome of a coin toss (fair coin).If the coin comes up 'heads',you win and walk away with $2,000,which is a 100% rate of return.However,if the coin comes up 'tails',you lose and walk away with nothing,which is a - 100% rate of return.What is the expected return on this gamble?
A) 0%
B) 1,000%
C) 100%
D) 10%
E) -10%

Question

Quizplus · Accepted Answer

Expected return = E(k) = Pr₁k₁ + Pr₂k₂ + ... + Pr_nk_n Expected return = (0.5 × 1) + (0.5 × -1) Expected return = 0.00 or 0%

It Costs $1,000 to Enter the Following Game of Chance,which