Question
A game of chance offers the following odds and payoffs. Each play of the game costs $200, so the net profit per play is the
A game of chance offers the following odds and payoffs. Each play of the game costs $200, so the net profit per play is the payoff less $200.
Probability: 0.20, 0.40, 0.40
Payoff:$700, $300,$0
Net Profit: $500, $100 , $?200
a-1. What is the expected cash payoff? Expected cash payoff $ 260 - Correct Answer
a-2. What is the expected rate of return? Expected rate of return 30 % - Correct Answer
b-1. Calculate the variance of this rate of return. (Round your answer to the nearest whole number.) Variance
b-2. Calculate the standard deviation of this rate of return. (Round your answer to the nearest whole percent.) Standard deviation %
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