10. Playing roulette, if I bet colors (red or black) I get paid 1-1 on my bet (m

Question

10. Playing roulette, if I bet colors (red or black) I get paid 1-1 on my bet (meaning if I bet 5 dollars, I will win 5 dollars). If my results from a spin of the wheel will be: win 5 dollars if the result is red or lose 5 dollars if the result is not red, what is my expected value? 11. At the start of the season, the probability of the Eagles winning the super bowl this year was about 1.5%. a) Find the true odds of them winning the super bowl at the start of the season. b) The casino had them listed at 50-1 to win. What does this mean in terms of probability? 12, How much money should be deposited today into an account that earns 6% compounded semi- annually so that it will be $10,000 in 3 years?

Explanation / Answer

Ans(10):

there are two possible events "win that is getting red" and "loose that is getting not red"
p(win)=1/2
p(loose)=1/2
value of win=$5
value of loose= $5
So expected value of the game=(value of win)*p(win)-(value of win)*p(loose)=5*(1/2)-5*(1/2)=0

Hence answer is 0.

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