Expected values

Question

Charley pays

​$5.005.00

to play a game in which he flips two coins. If both coins land on​ heads, he wins

​$14.0014.00.

If the coins land any other​ way, he will lose the

​$5.005.00

he paid to play the game. What is the expected value to Charley for this​ game?

Answer 1

there is a .75 probability he will lose 5,005 You need to specifiy whether he gets his purchase price back. If he gets his 5,005 back plus 14,0014 then he will be up 14.0014 with probability .25. If he doe not, his net will be 9.00 ish the decimal points don't matter here. expectected value = .75*(-5) + either .25(14) or .25*(9) in the former the expected gain isa loss of 25 cents. in the latter the loss is $1.25. I would rather be the casino