Your friend is at the Roulette wheel and bets $100 on red. Her chances of winnin
ID: 3206736 • Letter: Y
Question
Your friend is at the Roulette wheel and bets $100 on red. Her chances of winning $100 are 20/42 and her chances of losing $100 are 22/42. You decided to bet $100 too.
a. What is her expected return and the variance of her return?
b. If you bet $100 on Red on the same spin as her what is the expected return of the sum of the two bets? What is its variance?
c. If you bet $100 on Red on the next spin (after her bet is finished) what is the expected return of the sum of the two bets? What is its variance?
Explanation / Answer
a) from above table expected return =-4.76
and variance =(10000-(-4.76)2) =9977.32
b)expected retun of sum of two bets =2E(X) =2*(-4.76)=-9.52
and varaince =4*Var(X) =4*9977.32=39909.30
c) from here expectec return =E(X1)+E(X2)=-9.52
and Varaince =Var(X1)+Var(X2)=9977.32+9977.32=19954.65
x P(x) xP(x) x^2P(X) 100 20/42 47.62 4761.90 -100 22/42 -52.38 5238.10 total -4.76 10000.00Related Questions
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