Four possibilities have probabilities 0.4,0.2,0.2 and 0.2 and values $80,$30,$0,and -$80 respectively.The expected value is:
A)$22
B)$24
C)$26
D)$28

Question

Four possibilities have probabilities 0.4,0.2,0.2 and 0.2 and values $80,$30,$0,and -$80 respectively.The expected value is:
A)​$22
B)$24
C)$26
D)​$28

Quizplus · Accepted Answer

To find the expected value, we multiply each value by its probability and add them up.

Expected value = $80(0.4) + $30(0.2) + $0(0.2) + (-$80)(0.2) 
Expected value = $32 + $6 - $16 
Expected value = $22

Therefore, the best choice is A.

Four Possibilities Have Probabilities 0