Suppose Chris is offered the following gamble:  with probability 0.1 he will win $90, with probability 0.4 he will win $50, and with probability 0.5 he will lose $60. The expected value of this gamble is found by solving:

A. 0.1 × $90 + 0.4 × $50
B. 0.1 × $90 + 0.4 × $50 - 0.5 × $60
C. ($90 + $50 - $60)/3
D. 0.1 × ($90 - $60) + 0.4 × ($50 - $60)


Answer: B

Economics

You might also like to view...

Until recently, many developing countries

A) encouraged foreign direct investment but discouraged foreign portfolio investment. B) sealed themselves off from foreign investment. C) were quite open to foreign investment. D) encouraged foreign portfolio investment but discouraged foreign direct investment.

Economics

Which of the following statements is(are) correct

a. As a result of the Great Depression of the 1930s, the quantity theory had come into disrepute, together with the rest of the classical theories. b. According to Friedman, the depression was caused by a fall in aggregate supply and not aggregate demand as believed by the Keynesians. c. As a result of the Great Depression of the 1930s, Friedman believed that the Keynesians had nothing to say about money demand. d. All of the above e. both b and c.

Economics

What is the relationship between the government's budget deficit and its tax revenue?

a. Budget deficit = government spending + tax revenue b. Budget deficit = government spending - tax revenue c. Government spending = budget deficit / tax revenue d. Tax revenue = government spending + budget deficit e. Budget deficit = tax revenue - government spending

Economics

The cross elasticity of demand between digital cameras and memory cards is likely to be:

A. Zero B. A negative number C. A positive number greater than 1 D. A positive number between zero and 1

Economics