Suppose a fair, two-sided coin is flipped. If it comes up heads you receive $5; if it comes up tails you lose $1. The expected value of this lottery is
A) $2
B) $3
C) $4
D) $5

Name: Suppose a fair, two-sided coin is flipped. If it comes up heads you receive $5; if it comes up tails you lose $1. The expected value of this lottery is A) $2 B) $3 C) $4 D) $5
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Question

Quizplus · Accepted Answer

The expected value is calculated as (0.5 * $5) + (0.5 * -$1) = $2.

Suppose a Fair, Two-Sided Coin Is Flipped