Business: Consider two options: (A) you receive a guaranteed payment of $100; (B) a coin is tossed and if heads comes up, you win nothing; if tails comes up, you win $200. The expected payoff for option B is:

Strongest Ninja? I think no....

Consider two options: (A) you receive a guaranteed

Ответ:

spazzinchicago

20.01.2022

Business

The expected payoff for option B is $100.

Explanation:

The payoff is a random variable. The expected value, E(X), of a random variable is determined as the sum of the products of the value of each outcome by its corresponding probability:

$E(X)=\sum\limits^n_{i=1} {p(x_i)}\cdot x_i$

For option B:

number of outcomes, n = 2 (head and tail)value of x₁ = head: 0probability of head, p(x₁) = 0.5value of x₂ = tail: $200parobablity of tail, p(x₂) = 0.5

$E(X)=0.5\times 0+0.5\times \$200=\$100$

Hence, the expected pay off is $100.

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Consider two options: (A) you receive a guaranteed payment of $100; (B) a coin is tossed and if heads comes up, you win nothing; if tails comes up, you win $200. The expected payoff for option B is:

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