Question
Suppose you play a game repeatedly. On each play, your winnings, which is negative if you lose, has a positively skewed distribution with mean -$5
Suppose you play a game repeatedly. On each play, your "winnings," which is negative if you lose, has a positively skewed distribution with mean -$5 and standard deviation $20. In other words, you tend to lose, but because of the large standard deviation and skewness, you sometimes win big. If you play this game 100 times, which of the following is true of your cumulative "winnings" (because of the central limit theorem)?
The probability of a cumulative loss of at least $100 is about 2/3
The probability of a cumulative loss of at least $100 is about 0.975.
The probability of a cumulative loss of at least $700 is about 1/3. The probability of a cumulative loss of at least $500 is about 2/3.
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