Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 The AMS is running a fundraiser by selling lottery tickets for $2 each. Each ticket indepen- dently has a 1/50 chance of

image text in transcribed

Question 2 The AMS is running a fundraiser by selling lottery tickets for $2 each. Each ticket indepen- dently has a 1/50 chance of winning $95. A student with just $10 decides that they will purchase one ticket each day. They decide that they will stop if they either win once (i.e., they will not purchase more tickets), or until they run out of money. a) Provide the probability distribution of the student's final net gain (give a table of possible values and their associated probabilities). Keep probabilities to 4 siginficant figures. b) What is the expected value of the student's strategy? The standard deviation? c) Suppose the student has $ 200 instead, and spends this all on lottery tickets, regardless of the outcome. What is the expected value and standard deviation of the net gain of this new strategy? (2.5 marks) d) Approximately compute the probability that the student makes a profit from this new strategy. (hint: use Poisson approximation to Binomial rv)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Making Hard Decisions with decision tools

Authors: Robert Clemen, Terence Reilly

3rd edition

538797576, 978-0538797573

More Books

Students also viewed these Mathematics questions

Question

2. Avoid controlling language, should, must, have to.

Answered: 1 week ago