Calculate the expected value, Basic Statistics

Assignment Help:

Imagine you are faced with the opportunity to play two coin flips, in which you get to call heads or tails prior to the flip of a fair, two-sided coin.  (That is, heads and tails have equal likelihoods of occurring on any given flip.)

In Game A, a correct call wins you $1000; for an incorrect call, you neither win nor lose money.  Game A costs $0 to play.In Game B, a correct call wins you $10,000; an incorrect call loses you $3,000.  Game B costs $0 to play.

a.  What is the expected value of each game?

b.  If you had to play one of the two games, which would you choose and why?  Please answer this as realistically as you can, given your (and/or your group members') actual preferences, wealth, risk aversion, etc.  Do not answer this question for some hypothetical person.  Imagine that you, yourself, have been given this actual choice and must now make a decision.

c.   At what cost of your preferred game would you be indifferent between the two games?  How did you arrive at this number?

 


Related Discussions:- Calculate the expected value

Frequcency, how can we construct a bivariate frequency distribution

how can we construct a bivariate frequency distribution

Statistical quality control, If in a hall there are 18 persons then how man...

If in a hall there are 18 persons then how many handshakes are possible?

Ms 4, 2. From the following cost, production and sales data of Decors Motor...

2. From the following cost, production and sales data of Decors Motor Ltd., prepare comparative income statement for three years under (i) absorption costing method, and (ii) margi

Intermediate accounting, In November and December 2010, Lane Co., a newly o...

In November and December 2010, Lane Co., a newly organized magazine publisher, received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 2011 i

Homework help, example of descriptive statistics in word form

example of descriptive statistics in word form

Normal distribution, In a mathematics examination the average grade was 82 ...

In a mathematics examination the average grade was 82 and the standard deviation was 5. all students with grade from 88 to 94 received grade of B. if the grade are approximately no

Nuclear spin, Nuclear spin All nucleons (protons or neutrons) are spin par...

Nuclear spin All nucleons (protons or neutrons) are spin particles. They have spin odd half multiple of h = (h/2p) they follow Fermi disc statistics or Pauli’s exclusion principle

Accrue definition in accounts, To history income and expenditures/expenses ...

To history income and expenditures/expenses when they connect with the identification requirements of the finance form engaged regardless of when the money action happens.

Co-efficient of covariance., solution of problems based on coefficient of c...

solution of problems based on coefficient of covariance

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd