Expected Value

Question 1

You toss two number cubes. If a sum of 7 or 11 comes up, you get 7 points, if not you lose 2 points.The probabilities for each of the sums is:P(2) = 1/36 P(3) = 1/18 P(4) = 1/12 P(5) = 1/9 P(6) = 5/36 P(7) = 1/6 P(8) = 5/36 P(9) = 1/9 P(10) = 1/12 P(11) = 1/18 P(12) = 1/36 The probability of a sum of 7 or 11 is:

Revolt · Accepted Answer

2 / 9

Question 2

The expected value of the number of points for one roll is:

Revolt · Accepted Answer

0

Question 3

Based on the expected value, you should make investment Ainvestment Bneither investment A nor investment B.

Revolt · Accepted Answer

investment B

Question 4

In basketball, Shaquille makes 40% of his free throw attempts. He goes to the free throw line to shoot one-and-one (if he makes the first shot, he gets to shoot one more). He scores 1 point per free throw. What is the expected value of the number of points he will score?

Revolt · Accepted Answer

0.56

Question 5

Roll a number cube. If the number cube comes up odd, you win the same number of points as the number on the cube. If the number comes up even, you lose 4 points.What is the expected number of points per roll?

Revolt · Accepted Answer

–0.5

Question 6

A real estate agent spends $1,500 on advertising for three months to sell an average house. If the house sells in three months, the agent earns $9,000. Otherwise, he loses the listing and earns nothing. If there is a 40% chance that the house will sell in three months, what is the expected revenue for the real estate agent?

Revolt · Accepted Answer

$2,100

Question 7

In each turn of a game you toss two coins. If 2 heads come up, you win 2 points and if 1 head comes up you win 1 point. If no heads come up, you lose 3 points.What is the expected value of the number of points for each turn?

Revolt · Accepted Answer

0.25

Question 8

You are considering two investment opportunities. For investment A there is a 25% chance that you lose $20,000, a 50% chance that you break even, and a 25% chance that you make $80,000. For investment B there is a 30% chance that you lose $50,000, a 50% chance that you break even, and a 20% chance that you make $180,000. Based on the expected value of each, which investment should you make? The expected value of investment A is $.

Revolt · Accepted Answer

15000

Question 9

What is the expected number of female children in a family with three children?

Revolt · Accepted Answer

1.5

Question 10

Question 11

Revolt · Accepted Answer

To determine if the company should make the product, calculate the expected value (EV). First, find the profit (P) if successful: $240,000 - $196,000 = $44,000. If unsuccessful, the company loses the development cost, resulting in -$196,000. Using the probabilities, EV = ($44,000 * 0.75) + (-$196,000 * 0.25). EV = $33,000 - $49,000 = -$16,000. Since the expected average profit is -$16,000, the company should not make the product.

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