Find the distribution of final wealth

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Reference no: EM131775329

Question: Consider the following game. There is a set of 3 coins labelled 1, 2, and 3. The first coin has probability of heads 0.4, the second coin has probability of heads 0.6, and the third coin is fair. Your initial capital is $1. You toss the three coins in turn. If coin n results in heads, then your wealth is increased by factor of n + 1; otherwise, the wealth is decreased by factor of n + 1, where n = 1, 2, 3. Draw a scenario tree indicating possible outcomes along with their probabilities. Find the distribution of your final wealth.

Reference no: EM131775329

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