SOLUTION: Find the expected payback for a game in which you bet $10 on any number from 0 to 99. If your number comes up, you get $500.
I tried working it out the way the bo
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Question 1149764: Find the expected payback for a game in which you bet $10 on any number from 0 to 99. If your number comes up, you get $500.
I tried working it out the way the book said to and I got a payback of 0.00 which would be a fair bet, but it says it's wrong. Please help.
Answer by math_helper(2461) (Show Source): You can put this solution on YOUR website!
Find the expected payback for a game in which you bet $10 on any number from 0 to 99. If your number comes up, you get $500.
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In this game, you will lose 99 out of 100 plays, and win 1 out of 100 plays. Assuming the bet is always collected by the house:
(-10)*(99/100) + (500-10)*(1/100) = -5
The expected payback for this game is to LOSE $5 per play (on average) for a large number of plays of this game.
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EDIT: The solution I gave assumes each number is equally likely to come up.
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