Consider the two options in the following table, both of which have random outcomes:

Option 1	Option 2
Probability of Outcome	Possible Outcomes ($)	Probability of Outcome	Possible Outcomes ($)
1/16	150	1/5	120
4/16	300	1/5	255
6/16	750	1/5	1,500
4/16	300	1/5	255
1/16	150	1/5	120

a. Determine the expected value of each option.

Expected value of Option 1: $ _____________

Expected value of Option 2: $ _______________ b. Determine the variance and standard deviation of each option. Instructions: Round your answers for standard deviation to two decimal places.

Variance of Option 1: ________

Standard deviation of Option 1: ____________

Variance of Option 2: _____________

Standard deviation of Option 2: ______________ c. Which option is most risky?

multiple choice

• Option 1
• Option 2