Which of the following chances has the biggest expected return?
A) a 50% chance of winning $1,600 and a 50% chance of winning $0
B) a 100% chance of getting $800
C) a 50% chance of winning $1,600, 25% chance of winning $3,200 and a 25% chance of losing $3,200
D) All of the above have the same expected return.

Question

Quizplus · Accepted Answer

The expected return for each option is calculated as follows:- A) $0.5 \times 1600 + 0.5 \times 0 = 800$- B) $1 \times 800 = 800$- C) $0.5 \times 1600 + 0.25 \times 3200 - 0.25 \times 3200 = 800$All options have an expected return of $800, making their expected returns equal.

Which of the Following Chances Has the Biggest Expected Return