If an investment has a 20% (0.20) probability of returning $1,000; a 30% (0.30) probability of returning $1,500; and a 50% (0.50) probability of returning $1,800; the expected value of the investment is:
A) $1,433.33
B) $1,550.00
C) $2,800.00
D) $1,600.00

Question

Quizplus · Accepted Answer

To find the expected value, we multiply each outcome by its corresponding probability and add them up. 
Expected value = (0.20 x $1,000) + (0.30 x $1,500) + (0.50 x $1,800) = $200 + $450 + $900 = $1,550. Therefore, the best choice is B, as it represents the calculated expected value of the investment.

If an Investment Has a 20% (0