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Question

On an American roulette wheel, there are 18 red numbers, 18 black numbers, plus 2 green numbers (0 and 00). If you bet $N on red, you win $N if a red number comes up (i.e., you get $N back - your original bet plus you $N profit.); if a black or green number comes up, you lose you $N bet. Find the expected payoff of a $1 bet on red. 

 

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Answer 1

probability of getting a red number= 18/ (18+18+2) = 18/38 = 9/19

 

Expected payoff= 1*(9/19) - 1*(10/19) = -1/19, which approximately equal to -0.053 --> this is a bad bet.