A game of chance offers the following odds and payoffs. Each play of the game costs

$100, so the net profit per play is the payoff less $100.

PROBLEM SETS Visit us at www.mhhe.com/bma 180 Part Two Risk Probability Payoff Net Profit

.10 $500 $400

.50 100 0

.40 0 100 What are the expected cash payoff and expected rate of return? Calculate the variance and standard deviation of this rate of return.

AppendixLO1