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Sagot :
Answer:
The expected value of the proposition is $2.50.
Explanation:
When a coin is tossed two times, the following is the sample space (S)
S = {HT,TH,TT,HH}
Using the information in the question, we can derive the following win/loss table:
S Probability Payoff
TH 1/4 -$30
HT 1/4 -$30
TT 1/4 -$30
HH 1/4 $100
The expected value (E) can now be calculated as follows:
E = Sum of (Probability * Payoff) = (1/4 * ($-30)) * (1/4 * ($-30)) * (1/4 * ($-30)) = (1/4 * $100) = ((1/4) * (-30)) + ((1/4) * (-30)) + ((1/4) * (-30)) + ((1/4) * 100) = $2.50
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