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Expected Value Solution Slide

In this document, there are summaries of 4 word problems: 1) A woman plays a gambling game where she wins $3 for drawing a jack or queen, $5 for a king or ace, and loses otherwise. The question is how much she should pay to make the game fair. 2) A car wash attendant is paid either $7, $9, $11, $13, $15, or $17 with certain probabilities. The question is to find the attendant's expected earnings during a specific time period. 3) A person can make $4000 profit with 30% probability or lose $1000 with 70% probability from investing in a stock. The question is to find the expected gain

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Sadman Siam
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191 views8 pages

Expected Value Solution Slide

In this document, there are summaries of 4 word problems: 1) A woman plays a gambling game where she wins $3 for drawing a jack or queen, $5 for a king or ace, and loses otherwise. The question is how much she should pay to make the game fair. 2) A car wash attendant is paid either $7, $9, $11, $13, $15, or $17 with certain probabilities. The question is to find the attendant's expected earnings during a specific time period. 3) A person can make $4000 profit with 30% probability or lose $1000 with 70% probability from investing in a stock. The question is to find the expected gain

Uploaded by

Sadman Siam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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In a gambling game, a woman is paid 3 if she draws a jack or a queen and 5 if she draws a king or an ace

from an ordinary deck of 52 playing cards. If she draws any other card, she loses. How much should she pay
to play if the game is fair?
An attendant at a car wash is paid according to
the number of cars that pass through. Suppose the
probabilities are 1/12, 1/12, 1/4, 1/4, 1/6, and 1/6,
respectively, that the attendant receives $7, $9, $11,
$13, $15, or $17 between 4:00 P.M. and 5:00 P.M. on
any sunny Friday. Find the attendant’s expected earnings for this particular period.
By investing in a particular stock, a person can Suppose that an antique jewelry dealer is interested in
make a profit in one year of $4000 with probability 0.3 purchasing a gold necklace for which the probabilities
or take a loss of $1000 with probability 0.7. What is are 0.22, 0.36, 0.28, and 0.14, respectively, that
this person’s expected gain she will be able to sell it for a profit of $250, sell it for
a profit of $150, break even, or sell it for a loss of
$150.
What is her expected profit
A private pilot wishes to insure his airplane for
$200,000. The insurance company estimates that a total loss will occur
with probability 0.002, a 50% loss
with probability 0.01, and a 25% loss with probability 0.1. Ignoring all
other partial losses, what premium
should the insurance company charge each year to realize an average
profit of $500?

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