1. Suppose you paid $2 for a bet on a horse and as a result you will...

Question:

1. Suppose you paid $2 for a bet on a horse and as a result you will win $100 if your horse wins a given race. Find the expected value of the bet if the odds that the horse will win are 3 to 12.

2. A state lottery pays $500 to anyone who selects the correct 3-digit number from a random drawing. If it costs $1 to play, then the probability distribution for the amount won is given in the table. What are the expected winnings of a person who plays?

x Pr(x)

-1........................0.999

499.......................0.001

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...