Question 323168: I am having some difficulty starting to answer the below. Any advice or help is greatly appreciated.
An urn contains 4 green, 6 blue and 10 yellow chips.
You pay $5 to draw a chip from the urn. Here are the rules of the game:
if you draw a green chip, the dealer returns you your bet and gives you an additional $5.
if you draw a blue chip, the dealer returns you your bet and gives you $1.
if you draw a yellow chip, the dealer keeps your $5.
What is the expected value of this game?
Tip: make a table with x-column money to win/lose (+/-) and probability column P(x)
that this happens, then calculate Expected Value of x E(x) for this distribution.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! An urn contains 4 green, 6 blue and 10 yellow chips.
You pay $5 to draw a chip from the urn. Here are the rules of the game:
if you draw a green chip, the dealer returns you your bet and gives you an additional $5.
if you draw a blue chip, the dealer returns you your bet and gives you $1.
if you draw a yellow chip, the dealer keeps your $5.
What is the expected value of this game?
Tip: make a table with x-column money to win/lose (+/-)
and probability column P(x) that this happens, then calculate
Expected Value of x, E(x) for this distribution.
-----
Random win values: 5..........1.......-5
Probability values:4/20......6/20.....10/20
---------
Expected value: [5*4 + 1*6 -5*10]/20
= -24/20
= -$1.20
You can expect to lose $1.20 each time you play the game.
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Cheers,
Stan H.
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