What is your expected value for a game if your probability of winning is 1/5 and your profit is three times your wager? Assume the wager is $1.
A)$0.20
B)-$0.20
C)-$1.40
D)$1.40

Question

Quizplus · Accepted Answer

The expected value can be calculated as follows:
E(X) = (Probability of Winning * Profit on Win) - (Probability of Losing * Wager)
E(X) = (1/5 * 3) - (4/5 * 1)
E(X) = (3/5) - (4/5)
E(X) = -1/5
Since the expected value is negative, it means that on average, the player will lose money. Therefore, the best choice is not to play the game at all.

What Is Your Expected Value for a Game If Your