Event

Question

Probability .37 .18 .13 .32
Dollar Payoff -2 0 6 3

1)Calculate the expected value to two decimal places

2) If the pay off is negative 2 do we win or lose $2?

Answer 1

1) Exp. value = (.37)(-2) + (0.13)(6) + (0.13)(3)= $ 0.43
2) For -2 payoff you lose $2