Reply To: Financial Expectation2018-11-29T14:13:22+10:00

Maths Made Easy Forums Standard Probability & Relative Frequency Financial Expectation Reply To: Financial Expectation

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A game is played by tossing two coins. The rules are: If two heads are thrown you win $10. If two heads are not thrown you lose $5.
a. Determine the financial expectation for this game.

b. If you played this game 50 times, how much would you expect to win or lose?

a. P(2 heads) = ¼  P(not 2 heads) = ¾

E = ¼ × 10 + ¾ × -5
E = -1.25
Lose $1.25

b. n = 50
E = 50 × -1.25

= -62.5

∴ lose $62.50

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