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Self-Study Problem 7.01 Crane made a friendly wager with a colleague that involves the result from flipping a coin. If heads comes up, Crane must
Self-Study Problem 7.01 Crane made a friendly wager with a colleague that involves the result from flipping a coin. If heads comes up, Crane must pay her colleague $21; otherwise, her colleague will pay Crane $21. What is Crane's expected cash flow, and what is the variance of that cash flow if the coin has an equal probability of coming up heads or tails? (Round answers to 2 decimal places, e.g. 52.75.) Expected cash flow $ Cash flow variance Suppose Crane's colleague is willing to handicap the bet by paying her $27 if the coin toss results in tails. If everything else remains the same, what are Crane's expected cash flow and the variance of that cash flow? Expected cash flow $ Cash flow variance
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