Question

A game is played by flipping three coins. If all three coins lands heads up you win $15. If two coin lands heads up you win $5. If one coin lands heads up you win $2. If no coins land heads up you win nothing. If you play $4 to play, what are you expected winnings?
Answer choice: a.)$1.00 b.) -$1.00 c.)-$0.50 d.)$0.50

Answer 1

P(3H) = 1/8
P(2H) = 3/8
P(1H) = 3/8
P(0h) = 1/8

expected winnings
3H ---> (1/8)15 = 1.875
2H ---> (3/8)5 = 1.875
1H ----> (3/8)2 = .75
0H -----> 0

total expected value = 3.5
but you paid $4.00
so you will lose $0.50

choice c) -.50

Answer 2

Thanks