Asked by Gaganveer Dhaliwal on Sep 24, 2024
Verified
Six possibilities are equally likely and have payoffs of $2,$4,$6,$8,$10,and $12.The expected value is:
A) $4
B) $5
C) $6
D) $7
Expected Value
An average value determined by weighing all potential outcomes of a random variable according to their likelihood of happening.
Payoffs
The returns or benefits received from a particular course of action or decision, often evaluated in decision-making processes.
- Acquire insight into the notion of expected value and its determination in simple contexts.
Verified Answer
KN
Kevin Nguyen2 days ago
Final Answer :
D
Explanation :
The expected value can be calculated by taking the average of the payoffs:
(2+4+6+8+10+12)/6 = $7. Therefore, the best choice is the option with the highest payoff, which is $12.
(2+4+6+8+10+12)/6 = $7. Therefore, the best choice is the option with the highest payoff, which is $12.
Learning Objectives
- Acquire insight into the notion of expected value and its determination in simple contexts.